Buy the Pullback in Agnico Eagle Mines Stock

Mining Company IAMGOLD's (IAG) production guidance shows it likely won't capitalize on rising gold price.

Agnico Eagle Mines stock [stock_market_widget type="inline" template="generic" color="default" assets="AEM.TO" markup="(TSX: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] has been in pullback mode of late. Shares of the company are down around 6% in the past month, but this could be an opportunity in disguise for investors as Agnico can turn on the heat once again when it releases its third-quarter results on Oct. 23.

Let’s see what investors can expect from Agnico Eagle and if the company can deliver as per Wall Street’s expectations.

The Headline Numbers

Agnico Eagle’s top line is expected to jump 36% year over year in the third quarter to nearly $707 million. The company’s earnings per share are expected to jump to $0.27 per share as compared to $0.01 per share a year ago.

Agnico has been taking steps to gradually increase its production and keep costs low at the same time.

This clearly indicates that Wall Street is expecting terrific results from the company, and don’t be surprised to see it deliver the same for two reasons – improving production and higher prices.

Agnico has been taking steps to gradually increase its production and keep costs low at the same time. The company anticipates full-year gold production of 1.75 million ounces. Its total cash cost per ounce is expected to range between $620 an ounce and $670 an ounce, while all-in sustaining costs are expected between $875 and $925 an ounce.

For comparison, Agnico’s production in the first six months of 2019 stood at 810,532 ounces, which means that the company believes that its second-half performance will be stronger. Agnico Eagle’s total cash costs per ounce in the first half of 2019 came in at $638, while all-in sustaining costs were $895 an ounce.

So Agnico Eagle seems all set to end 2019 on a high thanks to higher production and lower costs, while gold prices will continue to act as a tailwind for the company.

Gold Price Growth Could Be a Big Catalyst

In the third quarter of 2018, Agnico Eagle’s average realized gold price came in at $1,204 an ounce. So investors can expect a massive jump in that metric as gold has averaged at a much higher level in the third quarter of the current calendar year.

More specifically, the price of gold hovered around the $1,400 an ounce mark in July and picked up the pace in August. Gold began September with a price of nearly $1,530 an ounce before ending the month at around $1,480 an ounce. This means that Agnico Eagle will witness a much higher average gold price this time around.

eOn the other hand, Agnico Eagle’s gold production could also increase by a decent margin. The company had delivered production of 421,000 ounces in the year-ago period. Assuming that the company manages to deliver around 470,000 ounces of production in the third quarter of 2019, based on its guidance for the remainder of the year, its output could jump in the double digits.

So it would be a good idea to go long Agnico Eagle Mines and take advantage of the recent weakness in the stock price because the company could quickly get back on track.

Harsh Singh Chauhan has a wealth of experience evaluating publicly-traded companies across several verticals, including technology, oil and gas, retail, and consumer goods. His financial writing has been published across platforms such as The Motley Fool, TheStreet, and Seeking Alpha. Harsh's philosophy is to find great businesses for the long run based on company fundamentals and industry prospects. Address: 682 Indian Road, Toronto, Ontario, M6P 2C9. Phone: 416-721-8257.


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