Rating Change #7

Agnico-Eagle Mines ( AEM) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth significantly trails the industry average of 65.3%. Since the same quarter one year prior, revenues rose by 30.6%. 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.
  • AEM's debt-to-equity ratio is very low at 0.17 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that AEM's debt-to-equity ratio is low, the quick ratio, which is currently 0.64, displays a potential problem in covering short-term cash needs.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, AGNICO EAGLE MINES LTD underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 39.87%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 167.60% compared to the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, AEM is still more expensive than most of the other companies in its industry.

Agnico-Eagle Mines Limited, through its subsidiaries, engages in the exploration, development, and production of mineral properties in Canada, Finland, and Mexico. The company primarily explores for gold, as well as silver, copper, zinc, and lead. The company has a P/E ratio of 23.8, below the average metals & mining industry P/E ratio of 23.9 and above the S&P 500 P/E ratio of 17.7. Agnico-Eagle Mines has a market cap of $7.6 billion and is part of the basic materials sector and metals & mining industry. Shares are down 44.4% year to date as of the close of trading on Friday.

You can view the full Agnico-Eagle Mines Ratings Report or get investment ideas from our investment research center.

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