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AEM’s Cash Harvesting Phase Is Coming Up



AEM’s stock outperformance

Agnico Eagle Mines’ (AEM) stock has significantly outperformed its peers year-to-date. Up to April 25, AEM’s stock has risen 43.1% compared to a 3.6% and 3.9% decline in the SPDR Gold Shares (GLD) and the VanEck Vectors Gold Miners ETF (GDX), respectively. Its close peers (NUGT) are also underperforming by a wide margin. Compared to AEM’s 43% gain, Barrick Gold (GOLD), Newmont Mining (NEM), Kinross Gold (KGC), Yamana Gold (AUY), and IAMGOLD (IAG) have seen price performance of -5.2%, -1.5%, -7.2%, 0.5%, and 16.3%, respectively.

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Harvesting phase for AEM

Agnico’s stock has been on an uptrend in 2019, mainly because of its project execution. 2019 is expected to be a harvest year for the company. Many of its projects are expected to come online this year. The Meliadine mine is expected to reach commercial production in May 2019 while Amaruq remains on schedule to begin production in Q3 2019. On the back of these projects, Agnico expects to produce 1.75 million ounces of gold in 2019, which would be a record for the company.

Cash flows to accelerate

Moreover, as the company’s capital expenditure should decline due to project completion and higher earnings, its cash flows should see a significant rise in 2019. Analysts expect the company to generate positive FCF of $131 million this year after a few negative years. Its FCF is expected to further grow by 267% and 40% year-over-year in 2020 and 2021, respectively. Improved earnings and accelerating cash flows could make the company a good long-term bet for investors.


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