NEW YORK (TheStreet) -- Shares of Agnico Eagle Mines (AEM) - Get Agnico Eagle Mines Limited Report are climbing by 6.71% to $26.24 in mid-morning trading on Wednesday, as demand for gold increases amid uncertainty about China's economic future.
Gold for December delivery is up 0.96% to $1,127.60 per ounce on the COMEX this morning.
Continued uncertainty regarding the future of China's economy, following the country's currency devaluation last week, has upped demand for gold, which many view as a safe investment amid unpredictable markets, The Wall Street Journal reported.
However, investors are also awaiting the Fed's July minutes as they hope to gain a better understanding of when the central bank will increase interest rates. Such a move would weigh on the price of gold.
"Whether this will be enough to keep the upward momentum going remains to be seen as we head into the Fed meeting whereby the central bank will likely raise rates," INTL FCStone analyst Edward Meir told Reuters.
Agnico Eagle Mines is a gold producer based in Toronto, Canada.
Separately, TheStreet Ratings team rates AGNICO EAGLE MINES LTD as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate AGNICO EAGLE MINES LTD (AEM) a HOLD. The primary factors that have impacted our rating are mixed – some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 15.3%. Since the same quarter one year prior, revenues rose by 16.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- 48.32% is the gross profit margin for AGNICO EAGLE MINES LTD which we consider to be strong. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 1.97% trails the industry average.
- AEM's debt-to-equity ratio is very low at 0.29 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.96 is somewhat weak and could be cause for future problems.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 39.60%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 75.00% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Metals & Mining industry. The net income has significantly decreased by 73.2% when compared to the same quarter one year ago, falling from $37.68 million to $10.08 million.
- You can view the full analysis from the report here: AEM Ratings Report