Is AEM Stock a Screaming Buy After the 71% YTD Price Surge?

Agnico Eagle Mines Limited's AEM shares have performed impressively on the bourses this year thanks to a spike in gold prices and its forecast-topping earnings performance on higher realized prices and strong production. AEM stock has surged 71% year to date, modestly underperforming the Zacks Mining – Gold industry’s 73.6% rise while outperforming the S&P 500’s increase of 9.5%.
 
AEM’s gold mining peers, Barrick Mining Corporation B, Newmont Corporation NEM and Kinross Gold Corporation KGC, have rallied 54%, 84.2% and 105.5%, respectively, over the same period.

AEM’s YTD Price Performance

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Agnico Eagle has been trading above the 200-day simple moving average (SMA) since March 4, 2024. The stock is also currently trading above the 50-day SMA, which continues to read higher than the 200-day SMA, indicating a bullish trend.

Agnico Eagle’s Shares Trade Above 50-Day SMA

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Let’s take a look at AEM’s fundamentals to better analyze how to play the stock.

AEM Stock Poised for Growth on Advancement of Key Projects

Agnico Eagle is focused on executing projects that are expected to provide additional growth in production and cash flows. It is advancing its key value drivers and pipeline projects, including the Odyssey project in the Canadian Malartic Complex, Detour Lake, Hope Bay, Upper Beaver and San Nicolas.
  
The Hope Bay Project, with proven and probable mineral reserves of 3.4 million ounces, is expected to play a significant role in generating cash flow in the years to come. The processing plant expansion at Meliadine was completed and commissioned in the second half of 2024, with mill capacity expected to increase to roughly 6,250 tons per day in 2025.

The merger with Kirkland Lake Gold established Agnico Eagle as the industry's highest-quality senior gold producer. The integrated entity now has an extensive pipeline of development and exploration projects to drive sustainable growth. It also has the financial flexibility to fund a strong pipeline of growth projects.

AEM’s Solid Financial Health Supports Capital Allocation

AEM has a robust liquidity position and generates substantial cash flows, which allow it to maintain a strong exploration budget, finance a strong pipeline of growth projects, pay down debt and drive shareholder value. Its operating cash flow for the second quarter was $1,845 million in the second quarter, up 92% from $961 million a year ago.

AEM recorded second-quarter free cash flow of $1,305 million, more than doubling the prior-year quarter figure of $557 million. This was backed by the strength in gold prices and robust operational results. 

The company remains focused on paying down debt using excess cash, with long-term debt reducing by $550 million sequentially to $595 million at the end of the second quarter.  It ended the quarter with a significant net cash position of $963 million, driven by the increase in cash position and reduction of debt. Its long-term debt-to-capitalization is just around 5%. AEM also returned around $300 million in the second quarter. 

Higher gold prices should boost AEM’s profitability and drive cash flow generation. Gold prices are up roughly 28% this year, largely due to aggressive trade policies, including sweeping new import tariffs announced by President Donald Trump, which have intensified global trade tensions and heightened investor anxiety. Also, central banks worldwide have been accumulating gold reserves, led by risks arising from Trump’s policies. 

Gold prices shot up to a record high of $3,500 per ounce on April 22. While gold prices have fallen from their April 2025 high, they remain favorable, aided by geopolitical tensions, and are currently hovering above the $3,300 per ounce level. Increased purchases by central banks and geopolitical tensions are factors expected to help the yellow metal sustain the rally.

AEM offers a dividend yield of 1.2% at the current stock price. It has a five-year annualized dividend growth rate of 6.9%. AEM has a payout ratio of 27% (a ratio below 60% is a good indicator that the dividend will be sustainable). The company's dividend is perceived as safe and reliable, backed by strong cash flows and sound financial health.

AEM’s Earnings Estimates Northbound

The Zacks Consensus Estimate for AEM’s 2025 earnings has been going up over the past 60 days. The consensus estimate for third-quarter 2025 earnings has also been revised upward over the same time frame. 

The Zacks Consensus Estimate for 2025 earnings is currently pegged at $6.76, suggesting year-over-year growth of 59.8%. Earnings are expected to register roughly 50% growth in the third quarter.

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Agnico Eagle Stock Trades at a Premium

Agnico Eagle is currently trading at a forward price/earnings of 19.3X, a roughly 42.6% premium to the industry average of 13.53X. AEM is also trading at a premium to Barrick Mining, Newmont and Kinross Gold. Agnico Eagle has a Value Score of D. Barrick Mining has a Value Score of A, while Newmont and Kinross Gold have a Value Score of B.

AEM’s P/E F12M Vs. Industry, B, NEM & KGC

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Final Thoughts: Buy AEM Shares

With a strong pipeline of growth projects and solid financial health, AEM presents a compelling investment case for those seeking exposure to the gold mining space. A healthy growth trajectory and rising earnings estimates are the other positives. A favorable gold pricing environment also augurs well. We advise investors to bet on this Zacks Rank #1 (Strong Buy) stock now, as it has solid growth prospects. 

You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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