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Trade-Ideas: Agnico Eagle Mines (AEM) Is Today's "Dead Cat Bounce" Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Agnico Eagle Mines ( AEM) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Agnico Eagle Mines as such a stock due to the following factors:

  • AEM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $51.3 million.
  • AEM has traded 186,522 shares today.
  • AEM is up 3.2% today.
  • AEM was down 5.8% yesterday.

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More details on AEM:

Agnico-Eagle Mines Limited, through its subsidiaries, engages in the exploration, development, and production of mineral properties in Canada, Finland, and Mexico. It primarily explores for gold, as well as silver, copper, zinc, and lead. The stock currently has a dividend yield of 2.9%. AEM has a PE ratio of 27.8. Currently there are 4 analysts that rate Agnico Eagle Mines a buy, 1 analyst rates it a sell, and 10 rate it a hold.

The average volume for Agnico Eagle Mines has been 2.0 million shares per day over the past 30 days. Agnico Eagle Mines has a market cap of $5.3 billion and is part of the basic materials sector and metals & mining industry. The stock has a beta of -0.38 and a short float of 1.4% with 1.22 days to cover. Shares are down 45% year to date as of the close of trading on Thursday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Agnico Eagle Mines as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and poor profit margins.

Highlights from the ratings report include:

  • AEM's debt-to-equity ratio is very low at 0.25 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.06, which illustrates the ability to avoid short-term cash problems.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, AGNICO EAGLE MINES LTD has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • AGNICO EAGLE MINES LTD has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, AGNICO EAGLE MINES LTD turned its bottom line around by earning $1.81 versus -$3.35 in the prior year.
  • The gross profit margin for AGNICO EAGLE MINES LTD is currently lower than what is desirable, coming in at 33.15%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -7.24% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to $75.30 million or 61.20% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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