Sound bite for Twitter and StockTwits is: Dividend Growth Materials. The stock price is reasonable and it may be cheap. Debt Ratios are good. The Dividend Payout Ratios (DPR) are fine. The dividend yields are moderate with dividend growth good. See my spreadsheet on Agnico Eagle Mines Ltd.
Is it a good company at a reasonable price? The stock price seems reasonable. This is a materials stock (into mining), so it is risky. You must be careful when buying these stocks as it seems timing is everything. You should buy when it is relatively cheap. This stock is cyclical and it has cut dividends in the past as well as raised them.
I do not own this stock of Agnico Eagle Mines Ltd (TSX-AEM, NYSE-AEM). Recently, two mining stocks were recommended. Agnico-Eagle Mines Ltd (TSX-AEM) by Advice for Investors and Franco-Nevada (FNV.T) recommended in by a member of Ellen’s Investment Club. I decided to look at Agnico-Eagle Mines because it was also on the Money Sense List of Dividend Stocks.
When I was updating my spreadsheet, I noticed that long term investors have generally not made the 8% total return which is the minimum I like to see. See the Charts below for total return in CDN$ and US$. When I am looking at long term returns, I arbitrarily pick starting points 5, 10, 15 years etc. in the past. However, with resources timing is everything because of volatility.
The chart below shows that some of my starting points had high prices compared to other prices around that date. For example, 10 years ago the starting point is December 2011 with a price of $36.32. However, if the purchase was done two years later in December 14, the stock price was much lower at $22.02 and total return to date would have been 15.18%.
| # Years | Tot Ret | Start Year | Price | Date | Price | Tot. Ret |
|---|---|---|---|---|---|---|
| 5 | 6.38% | Dec-16 | $42.00 | Jan-16 | $26.78 | 13.86% |
| 10 | 5.35% | Dec-11 | $36.32 | Dec-14 | $22.02 | 15.18% |
| 15 | 2.77% | Dec-06 | $41.24 | Dec-05 | $19.76 | 12.30% |
| 18 | 9.99% | Dec-03 | $12.11 |
If you had invested in this company in December 2011, for $1,000.35 you would have bought 27 shares at $37.05 per share. In December 2021, after 10 years you would have received $211.76 in dividends. The stock would be worth $1,814.13. Your total return would have been $2,025.89.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $37.05 | $1,000.35 | 27 | 10 | $211.76 | $1,814.13 | $2,025.89 |
The dividend yields are moderate with dividend growth good. The current dividend yield is moderate (2% to 4% ranges) at 3.13%. The 5, 10 and historical dividend yields are low (below 2%) at 1.14%, 1.19% and 0.85%. Dividend growth is good (15% and higher) at 29.7% per year over the past 5 years. I have data for the past 18 years and yearly dividends were increased in 12 years and decreased in 6 years over this time period.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2021 is 63% with 5 year coverage at 64%. The DPR for Adjusted Earnings per Share (AEPS) for 2021 is 58% with 5 year coverage at 70%. The DPR for Cash Flow per Share (CFPS) for 2021 is 21% with 5 year coverage at 17%. The DPR for Free Cash Flow (FCF) for 2021 is 71% with 5 year coverage at 314%. This is in US$ as the company reports in US$.
Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2021 is 0.20. This is low and good. The Liquidity Ratio for 2021 is good at 1.71. The Debt Ratio for 2021 is good at 2.42. The Leverage and Debt/Equity Ratios for 2021 are good at 1.70 and 0.70.
The Total Return per year is shown below for years of 5 to 18 to the end of 2021 in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2016 | 5 | 29.71% | 5.09% | 3.54% | 1.54% |
| 2011 | 10 | 10.55% | 7.70% | 6.13% | 1.57% |
| 2006 | 15 | 29.93% | 3.28% | 2.25% | 1.02% |
| 2003 | 18 | 23.67% | 9.71% | 8.42% | 1.29% |
The Total Return per year is shown below for years of 5 to 18 to the end of 2021 in US$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2016 | 5 | 31.21% | 6.38% | 4.82% | 1.57% |
| 2011 | 10 | 8.14% | 5.35% | 3.88% | 1.47% |
| 2006 | 15 | 29.20% | 2.77% | 1.70% | 1.06% |
| 2003 | 18 | 23.80% | 9.99% | 8.56% | 1.42% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 20.02, 27.95 and 34.35. The corresponding 10 year ratios are 20.78, 29.46 and 38.49. The corresponding historical ratios are 23.00, 30.98 and 42.64. The current P/E Ratio is 34.01 based on a stock price of $70.32 and EPS estimate for 2022 of $2.07 ($1.52 US$). The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in CDN$.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 39.47, 45.19, and 50.92. The corresponding 10 year ratios are 34.73, 44.33 and 58.22. The current P/AEPS Ratio is 22.98 based on AEPS of $2.26 and a stock price of $51.93. The current ratio is below the low of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$ and you will get similar results in CDN$.
I get a Graham Price of $57.74. The 10-year low, median, and high median Price/Graham Price Ratios are 1.50, 2.11 and 2.64. The current P/GP Ratio is 1.22 based on a stock price of $70.32. The current ratio is below the low of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap. This testing is in CDN$.
I get a 10-year median Price/Book Value per Share Ratio of 2.21. The current P/B Ratio is 1.47 based on a stock price of $51.93, Book Value of $16,127M, and Book Value per Share of $35.44. The current ratio is 34% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$ and you will get a similar result in CDN$.
I also have a Book Value per Share estimate for 2022. The Book Value per Share estimate for 2022 is $36.80. This implies a Book Value of $16,747M and a P/B Ratio of $1.41 based on a stock price of $51.93. This ratio is 36% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$.
I get a 10-year median Price/Cash Flow per Share Ratio of 12.51. The current P/CF Ratio is 10.28 based on Cash Flow per Share estimate for 2022 of $5.05, Cash Flow of $2,298M and a stock price of $51.93. The current ratio is 18% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$ and you will get similar results in CDN$.
I get an historical median dividend yield of 0.90%. The current ratio is 3.08% based on dividends of $1.60 and a stock price of $51.93. The current dividend yield is 242% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$ and you will get a similar result in CDN$.
I get a 10 year median dividend yield of 1.11%. The current ratio is 3.08% based on dividends of $1.60 and a stock price of $51.93. The current dividend yield is 177% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$ and you will get a similar result in CDN$.
The 10-year median Price/Sales (Revenue) Ratio is 4.24. The current ratio is 4.07 based on a stock price of $51.93, Revenue estimate for 2022 of $5,810M and Revenue per Share of $12.77. The current ratio is 4% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$.
Results of stock price testing is that the stock price is probably reasonable, but maybe cheap. The dividend yield tests are saying the stock price is cheap, but the P/S Ratio testings is saying it is reasonable.
When I look at analysts’ recommendations, I find Strong Buy (5) and Buy (8). The consensus would be a Strong Buy. The 12 month stock price consensus is $84.22 CDN$ ($61.91 US$). This implies a total return of 22.86% with 19.76% from capital gains and 3.10% from dividends based on a current stock price of $70.32 CDN$.
For the entries on Stock Chase for 2022, the recommendations are a buy. Stock Chase gives this stock 4 stars out of 5. Money Sense gives this company a C rating. Chris MacDonald on Motley Fool thinks this stock is a buy. Joey Frenette on Motley Fool thinks the way to invest in gold is buying this stock. The company put out a Press Release on the results of 2021. The company put out a Press Release on their results for the third quarter of 2022.
Simply Wall Street via Yahoo Finance talks about a independent director buying stock. Simply Wall Street gives out 4 warnings on this stock of dividend of 3.08% is not well covered by earnings or cash flows; shareholders have been substantially diluted in the past year; large one-off items impacting financial results; and profit margins (10.4%) are lower than last year (17.3%).
Agnico Eagle Mines is a gold miner operating mines in Canada, Mexico, and Finland. It also owns 50% of the Canadian Malartic mine. Its web site is here Agnico Eagle Mines Ltd.
The last stock I wrote about was about was KP Tissue Inc (TSX-KPT, OTC-KPTSF) ... learn more. The next stock I will write about will be Metro Inc (TSX-MRU, OTC-MTRAF) ... learn more on Monday, January 2, 2023 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
Wish you a happy new year Susan ,and thanks for your excellent reviews !
ReplyDeleteThanks and Happy New Year to you too.
ReplyDeleteSusan