Should You Buy, Sell or Hold AEM Stock Ahead of Q2 Earnings?

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AEM beat the Zacks Consensus Estimate for earnings in each of the last four quarters, with the average being roughly 9.9%.

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Q2 Earnings Whispers for AEM

Our proven model does not conclusively predict an earnings beat for AEM this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

AEM has an Earnings ESP of -2.01% and a Zacks Rank #5 (Strong Sell). You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Shaping AEM’s Q2 Results

The benefits of higher realized gold prices are expected to reflect on the company’s second-quarter performance. While gold prices have pulled back sharply from their January 2026 highs, they remain supportive. 

Heightened geopolitical tensions, a weaker U.S. dollar, tariff-related worries and concerns surrounding the Federal Reserve’s independence had driven bullion to a record high of nearly $5,600 per ounce in late January. Since then, gold has pulled back sharply due to inflation concerns triggered by a surge in crude oil prices amid Middle East tensions, with prices falling to $4,500 per ounce around the end of May. 

Bullion continued to retreat in June, with prices slipping below $4,000 per ounce to a near eight-month low amid rate-hike expectations and a stronger greenback, despite reduced inflation concerns following the interim agreement between the United States and Iran. 

Gold prices recouped some losses to climb above $4,100 per ounce recently, but again eased toward $4,000 per ounce as a surge in oil prices stoked renewed inflation fears, fueling a hawkish shift in interest rate expectations. Bullion prices are again rising toward $4,100 per ounce as oil prices fell on a pause in U.S.-Iran hostilities, and are up roughly 23% year over year. Our estimate for the realized gold price for the second quarter is pegged at $4,640 per ounce, indicating a 41% year-over-year increase.

Meanwhile, the company’s gold production fell 6% year over year in the first quarter to 825,109 ounces, impacted by reduced output at Macassa and Meadowbank on lower grades, offsetting gains at Detour Lake. Production is expected to have remained affected in the second quarter by lower output across certain mines, partly due to mill maintenance shutdowns. Our estimate for payable gold production is pegged at 827,779 ounces for the second quarter, suggesting a 4.4% year-over-year decline.

Higher production costs are likely to have weighed on AEM’s profitability. Its all-in sustaining cost (AISC) — the most important cost metric of miners — was $1,483 per ounce in the first quarter, marking a roughly 26% year-over-year rise. AISC increased year over year due to higher total cash costs and an uptick in sustaining capital expenditures. Total cash costs per ounce for gold were $1,093, 22% higher than $895 a year ago. Total cash costs rose due to increased royalty costs and lower production. While Agnico Eagle is taking action to control costs, the inflationary pressure is likely to have continued in the second quarter, weighing on its overall financial performance.

AEM Stock’s Price Performance and Valuation

AEM’s shares have gained 17.2% in a year, underperforming the Zacks Mining – Gold industry’s 39.8% rise and the S&P 500’s increase of 18%. With respect to its major gold mining peers, Barrick Mining Corporation B, Newmont Corporation NEM and Kinross Gold Corporation KGC have rallied 73.3%, 46.3% and 51.8%, respectively, over the same period.

AEM’s One-year Price Performance

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From a valuation standpoint, Agnico Eagle is currently trading at a forward 12-month earnings multiple of 12.29, a roughly 22.4% premium to the peer group average of 10.04X. AEM is also trading at a premium to Barrick Mining, Newmont and Kinross Gold. Agnico Eagle has a Value Score of D. Barrick Mining, Newmont and Kinross Gold have a Value Score of B, each.  

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

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Investment Thesis for AEM Stock

Agnico Eagle remains focused on 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, which are expected to provide additional growth in production and cash flows. 

AEM has a strong liquidity position and generates substantial cash flows, which allows it to maintain a strong exploration budget, finance a strong pipeline of growth projects, pay down debt and drive shareholder value.

Agnico Eagle, however, is exposed to higher production costs, which may weigh on its profit margins and overall financial performance. This calls for prudent cost management to maintain competitiveness and sustain margins.

How Should Investors Play the AEM Stock?

AEM is backed by a solid lineup of growth initiatives and a healthy balance sheet. Still-elevated gold prices should support stronger margins and improved cash flow. However, elevated cost levels and lower expected year-over-year production may weigh on the company’s performance. Its stretched valuation also might not offer an attractive entry point at this time. This, coupled with declining earnings estimates, casts a pall on the company's prospects. Therefore, it is prudent to avoid AEM stock ahead of the earnings release.  

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

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