AEM vs. KGC: Which Gold Mining Stock Should You Invest in Now?
Agnico Eagle Mines Limited AEM and Kinross Gold Corporation KGC are two prominent players in the gold mining space with global operations. With gold prices soaring to unprecedented levels, driven by global economic uncertainties and trade tensions, comparing these two major gold producers is particularly relevant for investors seeking exposure to the precious metals sector.Gold prices have zoomed roughly 25% this year, largely attributable 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. Prices of the yellow metal catapulted to a record high of $3,500 per ounce on Tuesday as the U.S. dollar tumbled amid President Trump's criticism of Federal Reserve Chair Jerome Powell and call for an immediate reduction in interest rates.Let’s dive deep and closely compare the fundamentals of these two Canada-based gold miners to determine which one is a better investment now. The Case for Agnico Eagle 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 coming years. 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 has a strong 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 jumped roughly 55% year over year to record $1,132 million in the fourth quarter of 2024. AEM also generated solid fourth-quarter free cash flows of $570 million, up around 89% year over year, backed by the strength in gold prices and strong operational results. It remains focused on paying down debt using excess cash, with net debt reducing by $273 million sequentially to $217 million at the end of the fourth quarter. It reduced net debt by $1,287 million in 2024. Its long-term debt-to-capitalization is just around 5.2%.AEM also returned around $920 million to its shareholders through dividends and repurchases last year. AEM offers a dividend yield of 1.3% at the current stock price. It has a five-year annualized dividend growth rate of 10.3%. AEM has a payout ratio of 38% (a ratio below 60% is a good indicator that the dividend will be sustainable). The company's dividend is perceived to be safe and reliable, backed by strong cash flows and sound financial health.Despite these positives, Agnico Eagle is plagued by higher production costs. In the fourth quarter of 2024, its total cash costs per ounce of gold were up roughly 4% from the previous year. All-in-sustaining costs (AISC) also rose roughly 7% year over year. AEM forecasts total cash costs per ounce in the range of $915 to $965 and AISC per ounce between $1,250 and $1,300 for 2025, suggesting a year-over-year increase at the midpoint of the respective ranges. While AEM is taking actions to control costs, the inflationary pressure is likely to continue over the near term, weighing on its profit margins and overall financial performance. Higher sustaining capital expenditures and cash costs are expected to contribute to increased AISC.The Case for Kinross Kinross has a strong production profile and boasts a promising pipeline of exploration and development projects. Its key development projects and exploration programs, including Great Bear in Ontario and Round Mountain Phase X in Nevada, remain on track. These projects are expected to boost production and cash flow and deliver significant value. KGC also completed the commissioning of its Manh Choh project and commenced production during the third quarter of 2024, leading to a substantial increase in cash flow at the Fort Knox operation.Tasiast and Paracatu, the company’s two biggest assets, remain the key contributors to cash flow generation and production. Tasiast remains the lowest-cost asset within its portfolio, with consistently strong performance, while Paracatu continues to deliver steady production. Tasiast achieved record annual production and cash flow in 2024. KGC has a strong liquidity position and generates substantial cash flows, which allows it to finance its development projects, pay down debt and drive shareholder value. The company ended 2024 with solid liquidity of roughly $2.3 billion. Kinross also generated record free cash flows of around $1.3 billion in 2024, driven by the strength in gold prices and strong operating margins. It also repaid $800 million of debt during the year. Its long-term debt-to-capitalization is 15%. KGC offers a dividend yield of 0.8% at the current stock price. It has a payout ratio of 18%, with a five-year annualized dividend growth rate of about -0.2%. Kinross is hamstrung by higher production costs, which are likely to eat into its margins. It saw a 12.5% year-over-year rise in production costs of sales per ounce to $1,098 in the fourth quarter of 2024. The same also rose roughly 8% year over year to $1,020 in 2024. This upward trend is expected to continue, with the company expecting production costs of sales per ounce to reach $1,120 in 2025 due to lower expected overall production and inflationary impacts. The company also expects AISC per gold equivalent ounce of $1,500 for 2025, up from $1,388 in 2024. Price Performance and Valuation of AEM & KGCYear to date, AEM stock has jumped 51.2%, while KGC stock has rallied 54.8% compared with the Zacks Mining – Gold industry’s increase of 51%. Image Source: Zacks Investment ResearchAEM is currently trading at a forward 12-month earnings multiple of 23.22, higher than its five-year median. This represents a roughly 39% premium when stacked up with the industry average of 16.7X. Image Source: Zacks Investment ResearchKinross looks more attractively priced than Agnico Eagle. The KGC stock is currently trading at a forward 12-month earnings multiple of 15.29, below the industry. Image Source: Zacks Investment ResearchHow Does Zacks Consensus Estimate Compare for AEM & KGC?The Zacks Consensus Estimate for AEM’s 2025 sales and EPS implies a year-over-year rise of 17% and 23.2%, respectively. The EPS estimates for 2025 have been trending higher over the past 60 days. Image Source: Zacks Investment ResearchThe consensus estimate for KGC’s 2025 sales and EPS implies year-over-year growth of 10.7% and 39.7%, respectively. The EPS estimates for 2025 have been trending northward over the past 60 days. Image Source: Zacks Investment Research(Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)AEM or KGC: Which is a Better Pick?Both AEM and KGC are well-positioned to capitalize on the current gold price rally. Both have a strong pipeline of development projects, solid financial health and strong earnings growth prospects, and are seeing favorable estimate revisions. On the other hand, they face the common headwind of higher production costs. However, AEM appears to have an edge over KGC due to its higher dividend yield and healthy dividend growth rate. AEM’s low leverage also suggests lower financial risks. Investors seeking exposure to the gold space might consider Agnico Eagle as the more favorable option at this time.AEM currently carries a Zacks Rank #2 (Buy), whereas KGC has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Kinross Gold Corporation (KGC): Free Stock Analysis Report Agnico Eagle Mines Limited (AEM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks
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