A number of gold stocks have lost ground over the past 6 months as the price for gold has stabilized at about $1600 an ounce. Agnico-Eagle Mines (NYSE:AEM) has been one of the stocks as it is down more than 20% over the past 6 months as the S&P 500 has posted a 10%+ gain. The company struggled in 2011 as it took a big writedown of one of its mines which totaled $644.9 million. However, 2012 and the years coming up should set AEM on the right path. In its Q4 release, the company said that it expects that most of its mines will produce more gold in 2012 than 2011. It further anticipates further growth in gold output in 2013 and 2014 from its existing mines while its advance its development projects at La India and Meliadine. Sean Boyd, President and Chief Executive Officer, added that "in 2012, Agnico-Eagle anticipates meeting its targets, increasing profitability and growing the shareholders' exposure to gold on a per share basis."
The trailing valuation metric and analysts suggest that the stock is undervalued while on a forward basis, it is overvalued. This suggests that the stock is undervalued but there may be other better values out there in the gold space. Below is an in depth look at the valuation metrics and stock chart.
Valuation: Agnico-Eagle Mines' trailing 5 year valuation metrics suggest that the stock is undervalued as all of the metrics are below their respective 5 year averages. Agnico-Eagle Mines' current P/B ratio is 1.8 and it has averaged 3.3 over the past 5 years with a high of 5 and low of 1.9. Agnico-Eagle Mines' current P/S ratio is 3.2 and it has averaged 14.3 over the past 5 years with a high of 24.8 and low of 3.2.
Price Target: The consensus price target for the analysts who follow Agnico-Eagle Mines is $44. That is upside of 27% from today's stock price of $34.41 and suggests that the stock has room to run from these levels.
Forward Valuation: Agnico-Eagle Mines is currently trading at about $34 a share with analysts expecting EPS of $2.39 next year, an earnings increase of 37% y/y, for a forward P/E ratio of 14.4. Taking a look at the company's publicly traded comparisons will give us a better idea of the stock's relative valuation. Barrick Gold (NYSE:ABX) is currently trading at about $40 a share with analysts expecting EPS of $6.02 next year, an earnings increase of 24% y/y, for a forward P/E ratio of 6.6. Goldcorp (NYSE:GG) is currently trading at about $41 a share with analysts expecting EPS of $3.38 next year, an earnings increase of 36% y/y, for a forward P/E ratio of 12.1. Newmont Mining (NYSE:NEM) is currently trading at about $47 a share with analysts expecting EPS of $5.61 next year, an earnings increase of 17% y/y, for a forward P/E ratio of 8.5. The mean forward P/E of Agnico-Eagle Mines's competitors is 9.1 which suggests that Agnico-Eagle Mines is overvalued relative to its publicly traded competitors.
Earnings Estimates: Agnico-Eagle Mines has beat EPS estimates 1 times in the past 4 quarters. The company's EPS figures have come in between -7 cents and 1 cents from consensus estimates or about -10.4% to 2.2% from analyst estimates. The company has reported earnings that have differed from analyst estimates by a small margin which suggests that the stock shouldn't experience upside from earnings surprises.
Price Action: Agnico-Eagle Mines is down 48.4% over the past year, underperforming the S&P 500, which is up 5.4%. Looking at the technicals, the stock is currently at its 50 day moving average, which sits at $34.41 and below its 200 day moving average, which sits at $46.55.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.