Is it a good company at a reasonable price? I also think of resource stocks as short term buys, where you buy at a relatively low point and sell and a relatively high point. It is currently a dividend growth stock, but dividend, the dividend growth has varied over the past. However, the price does seem relatively low currently.
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) was recommended by Advice for Investors site. Franco-Nevada (FNV.T) was recommended by a member of Ellen’s Investment Club. I decided to look at Agnico-Eagle Mines because it was on the Money Sense List of Dividend Stocks.
When I was updating my spreadsheet, I noticed that I still do not understand why resource stocks like this one are recommended for dividend investors. My objection is that you do not get a decent total return on a long term basis for resource. They are cyclical and I have bought some near the bottom of their cycle and sold near the top, but I would never consider a resource stock as a long term buy, that is buy and hold and forget about. See charts below. I do not ask for a high Total Return because my minimum is just 8% per year.
If you had invested in this company in December 2012, for $1,009.60 you would have bought 20 shares at $50.48 per share. In December 2022, after 10 years you would have received $184.28 in dividends. The stock would be worth $1,407.20. Your total return would have been $1,591.48. This is a total return would be a total return of 4.83% per year with 3.38% from capital gain and 1.49% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $50.48 | $1,009.60 | 20 | 10 | $184.28 | $1,407.20 | $1,591.48 |
The current dividend yield is moderate with dividend growth currently good. The current dividend yield is moderate (2% to 4% ranges) at 2.89%. The 5, 10 and historical dividend yields are low (below 2%) at 1.46%, 1.19% and 0.95%. The dividend growth is currently good (above 15%) at 33% per year for the past 5 years. But note that the dividends have increased 13 times and declined 6 times over the past 10 years.
The Dividend Payout Ratios (DPR) are fine because the important ones of for AEPS and CFPS are fine. The DPR for 2022 for Earnings per Share (EPS) is fine with current DPR at 105% but with 5 year coverage at 77%. The DPR for 2022 for Adjusted Earnings per Share (AEPS) is fine at 70% with 5 year coverage at 76%. The DPR for 2022 for Cash Flow per Share (CFPS) is good with current DPR 35% and with 5 year coverage at 22%. The DPR for 2022 for Free Cash Flow (FCF) is too high at 109% with 5 year coverage at 141%. Sites do not agree on FCF, but all show the DPR too high.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 104.58% | 76.71% |
| AEPS | 70.18% | 75.71% |
| CFPS | 34.52% | 21.75% |
| FCF | 108.94% | 140.97% |
Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2022 is good at 0.22 and currently at 0.27. The Liquidity Ratio for 2022 is a good at 1.30 and 1.99 currently. The Debt Ratio for 2022 is good at 13.24 and 3.15 currently. The Leverage and Debt/Equity Ratios for 2022 are good at 1.45 and 0.45 and currently at 1.47 and 0.47.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.22 | 0.27 |
| Intang/GW | 0.09 | 0.18 |
| Liquidity | 2.30 | 1.99 |
| Liq. + CF | 3.75 | 3.45 |
| Debt Ratio | 3.24 | 3.15 |
| Leverage | 1.45 | 1.47 |
| D/E Ratio | 0.45 | 0.47 |
The Total Return per year is shown below for years of 5 to 19 to the end of 2022 in CDN$. 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. |
|---|---|---|---|---|---|
| 2017 | 5 | 33.33% | 5.92% | 3.92% | 1.99% |
| 2012 | 10 | 10.53% | 4.86% | 3.38% | 1.49% |
| 2007 | 15 | 21.37% | 3.00% | 1.84% | 1.16% |
| 2003 | 19 | 23.59% | 9.62% | 8.22% | 1.40% |
The Total Return per year is shown below for years of 5 to 19 to the end of 2022 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. |
|---|---|---|---|---|---|
| 2017 | 5 | 31.30% | 4.39% | 2.40% | 1.99% |
| 2012 | 10 | 7.18% | 1.64% | 0.26% | 1.38% |
| 2007 | 15 | 18.85% | 0.82% | -0.31% | 1.13% |
| 2003 | 19 | 23.28% | 9.55% | 7.97% | 1.58% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 19.59, 27.94 and 34.41. The corresponding 10 year ratios are 23.04, 31.53 and 42.09. The corresponding historical ratios are 23.04, 31.53 and 42.09. The current P/E Ratio is 18.19 based a stock price of $55.30 and EPS estimate for 2023 of $3.04. The current ratio is below the low ratio of the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$ and you will get a similar result in CDN$.
I also have Adjusted Earnings per Share data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 19.78, 33.02 and 46.49. The corresponding 10 year ratios are 34.73, 44.33 and 58.22. The current P/AEPS ratio is 26.71 based on a stock price of $55.30 and AEPS estimate for 2023 of $2.07. This ratio is below the low ratio for the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$ and you will get a similar result in CDN$.
I get a Graham Price of $59.79. 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 1.23 based on as stock price of $73.24. This ratio is below the low ratio of the 10 year median ratios. This ratio is below the low ratio for the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap. This testing is in CDN$.
I get a 10-year median Price/Book Value per Share Ratio of 2.15. The current P/B Ratio is 1.27 based on a stock price of $55.30, Book Value of $19,933M and Book Value per Share of $43.67. The current ratio is 41% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$ and you will get a similar result in CDN$.
I also have a Book Value per Share estimate for 2023 of $37.00. This implies a P/B Ratio of 1.49 and a book Value of $16,889M with a stock price of $55.30. This ratio is 31% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$.
I get a 10-year median Price/Cash Flow per Share Ratio of 12.50. The current P/CF Ratio is 10.76 based on Cash Flow per Share estimate for 2023 of $5.14, Cash Flow of $2,346M and a stock price of $55.30. the current ratio is 14% below the current ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$ and you will get a similar result in CDN$.
I get an historical median dividend yield of 0.95%. The current dividend yield is 2.89% based on dividends of $1.60 and a stock price of $55.30. The current dividend yield is 205% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$ and you will get a similar result in CDN$.
I get a 10 year median dividend yield of 1.11%. The current dividend yield is 2.89% based on dividends of $1.60 and a stock price of $55.30. The current dividend yield is 160% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$ and you will get a similar result in CDN$.
The 10-year median Price/Sales (Revenue) Ratio is 4.24. The current P/S Ratio is 3.85 based on Revenue estimate for 2023 of $6,560M, Revenue per Share of $14.37 and a stock price of $55.30. The current ratio is 9% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$ and you will get a similar result in CDN$.
Results of stock price testing is that the stock price is reasonable and may even be cheap. The dividend yield tests say that the stock price is cheap. However, the P/S Ratio test only says it is reasonable and below the median. Other tests are showing the stock price as cheap. I did most testing in US$ as this stock reports in US$ and estimates are in US$.
When I look at analysts’ recommendations, I find Strong Buy (11), Buy (8) and Hold (1). The consensus would be a Strong Buy. The 12 month stock price consensus is $85.59 ($65.31 US$) with a high of $99.44 ($75.00 US$) and low of $70.27 ($53.00). The consensus price of $85.59 implies a total return of 20.96% with 18.06% from capital gains and 2.89% from dividends based on a current price of $73.34.
The recommendations on Stock Chase are mixed and are from Buy to Do Not Buy. Stock Chase gives this stock 5 stars out of 5. It is on the Monsey Sense and Dividend Aristocrat lists I follow. Aditya Raghunath on Motley Fool says this is a top gold mining company with upside potential. Chris MacDonald on Motley Fool says this is one of his favourite TSX mining stocks. The company put out a Press Release onNewswire about their fourth quarter of 2022 results. The company put out a press release via Newswire about their results for the third quarter of 2023.
Simply Wall Street via Yahoo Finance put out a report on this stock. Simply Wall Street gives this stock 3 and one half stars out of 5. They list 4 warnings of earnings are forecast to decline by an average of 32.4% per year for the next 3 years; large one-off items impacting financial results; shareholders have been diluted in the past year; and dividend of 2.89% is not well covered by cash flows.
Agnico Eagle is a gold miner with mines in Canada, Mexico, Finland, and Australia. Agnico operated just one mine, LaRonde, as recently as 2008 before bringing its other mines online in rapid succession in the following years. It merged with Kirkland Lake Gold in 2022, acquiring the Detour Lake and Macassa mines in Canada along with the high-grade, low-cost Fosterville mine in Australia. 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 Sleep Country Canada Holdings Inc (TSX-ZZZ, OTC-SCCAF) ... learn more on Friday, December 29, 2023 around 5 pm. Tomorrow on my other blog I will write about My Own Advisor Blogger .... learn more on Thursday, December 28, 2023 around 5 pm.
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