A month has gone by since the last earnings report for Agnico Eagle Mines (AEM). Shares have added about 4.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Agnico due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Agnico Eagle Tops Earnings and Sales Estimates in Q4
Agnico Eagle reported net loss of $393.7 million or $1.67 per share in fourth-quarter 2018, against net income of $37.5 million or 16 cents in the year-ago quarter. Results in the quarter were partly affected by impairment losses along with derivative losses on financial instruments and non-cash foreign currency translation losses on deferred tax liabilities and non-recurring tax adjustments. Notably, the company recorded hefty impairment losses of $389.7 million or $1.66 per share in the reported quarter.
Barring one-time items, adjusted earnings per share came in at 14 cents, which beat the Zacks Consensus Estimate of 3 cents.
Agnico Eagle generated revenues worth $537.8 million, down around 4.9% year over year. Nevertheless, the figure surpassed the Zacks Consensus Estimate of $509.4 million.
2018 Highlights
For 2018, net loss came in at $326.7 million or $1.40 per share, against net income of $240.8 million or $1.04 a year ago.
Revenues increased 2.3% year over year to roughly $2.2 billion.
Operational Highlights
Payable gold production fell 0.6% year over year to 410,712 ounces from 413,212 ounces in the year-ago quarter. Total cash costs per ounce were $608, up roughly 2.7% from $592 in the prior-year quarter.
AISC were $852 per ounce, down 5.9% from the prior-year quarter’s $905. The decline can be attributed to lower sustaining costs, partly offset by lower expected gold production along with higher total cash costs per ounce.
Financial Position
As of Dec 31, 2018, cash and cash equivalents were around $301.8 million, down roughly 52.3% year over year.
Long-term debt was $1,721.3 million at the end of 2018, up 25.5% year over year.
Total cash provided by operating activities were $140.3 million in the fourth quarter, down 16% year over year.
Total capital expenditure for the fourth quarter and 2018 totaled $289.1 million and $1.07 billion, respectively.
Outlook
Agnico Eagle provided production and cost guidance for 2019. Gold production for the year is now projected at 1.75 million ounces. The mid-point of the earlier guidance was 1.7 million ounces. Higher gold production view mainly considers commercial production at Meliadine, which is expected to start in the second quarter of 2019 along with a modest increase in gold production at Meadowbank.
Total cash costs per ounce is projected between $620 and $670. AISC is expected in the range of $875-$925 per ounce.
For 2019, the company expects to have the four key production assets — Canadian Malartic, the LaRonde complex, Meliadine and the Meadowbank complex — each with annual production rates of 250,000-400,000 ounces of gold.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -40.48% due to these changes.
VGM Scores
At this time, Agnico has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Agnico has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Agnico Eagle Mines Limited (AEM): Free Stock Analysis Report
Original post