Agnico Eagle Mines (AEM) and Randgold Resources (GOLD) Financial Analysis

Agnico Eagle Mines (NYSE: AEM) and Randgold Resources (NASDAQ:GOLD) are both basic materials companies, but which is the better business? We will compare the two companies based on the strength of their profitability, institutional ownership, valuation, risk, analyst recommendations, earnings and dividends.

Profitability

This table compares Agnico Eagle Mines and Randgold Resources’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Agnico Eagle Mines 10.88% 5.19% 3.28%
Randgold Resources 21.72% 7.13% 6.63%

Insider & Institutional Ownership

56.5% of Agnico Eagle Mines shares are owned by institutional investors. Comparatively, 35.3% of Randgold Resources shares are owned by institutional investors. 0.5% of Agnico Eagle Mines shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Agnico Eagle Mines pays an annual dividend of $0.44 per share and has a dividend yield of 1.0%. Randgold Resources pays an annual dividend of $1.98 per share and has a dividend yield of 2.5%. Agnico Eagle Mines pays out 39.6% of its earnings in the form of a dividend. Randgold Resources pays out 67.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Agnico Eagle Mines has raised its dividend for 6 consecutive years.

Valuation & Earnings

This table compares Agnico Eagle Mines and Randgold Resources’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Agnico Eagle Mines $2.24 billion 4.50 $243.88 million $1.11 38.95
Randgold Resources $1.28 billion 5.90 $278.01 million $2.92 27.39

Randgold Resources has lower revenue, but higher earnings than Agnico Eagle Mines. Randgold Resources is trading at a lower price-to-earnings ratio than Agnico Eagle Mines, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Agnico Eagle Mines has a beta of -0.43, meaning that its share price is 143% less volatile than the S&P 500. Comparatively, Randgold Resources has a beta of 0.11, meaning that its share price is 89% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations for Agnico Eagle Mines and Randgold Resources, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Agnico Eagle Mines 0 5 7 0 2.58
Randgold Resources 1 5 8 0 2.50

Agnico Eagle Mines presently has a consensus target price of $56.33, suggesting a potential upside of 30.31%. Randgold Resources has a consensus target price of $76.88, suggesting a potential downside of 3.87%. Given Agnico Eagle Mines’ stronger consensus rating and higher possible upside, equities research analysts plainly believe Agnico Eagle Mines is more favorable than Randgold Resources.

Summary

Randgold Resources beats Agnico Eagle Mines on 9 of the 17 factors compared between the two stocks.

Agnico Eagle Mines Company Profile

Agnico Eagle Mines Limited engages in the exploration, development, and production of mineral properties in Canada, Finland, and Mexico. It operates through three segments: Northern Business, Southern Business, and Exploration. The company primarily produces and sells gold, as well as explores for silver, zinc, and copper. Its flagship property is the LaRonde mine located in the Abitibi region of northwestern Quebec, Canada. As of December, 31, 2016, the LaRonde mine had a proven and probable mineral reserve of approximately 3.05 million ounces of gold. The company has exploration activities in Canada, Europe, Latin America, and the United States. Agnico Eagle Mines Limited was founded in 1953 and is headquartered in Toronto, Canada.

Randgold Resources Company Profile

Randgold Resources Limited is engaged in gold mining, exploration and related activities. The Company’s activities are focused on West and Central Africa. The Company operates through the gold mining segment. The Company operates various mines, such as Morila, Loulo, Gounkoto, Tongon and Kibali. The Company is exploring in African countries, such as Mali, Senegal, Cote d’Ivoire and the Democratic Republic of Congo (DRC). The Company also holds an interest in the Massawa project. The Company holds Morila Limited, which holds interests in the Morila mine in Mali. As of December 31, 2016, Morila mine has produced 122,370 ounces (oz) of gold. The Company holds a controlling interest in the Loulo mine, located in Mali, through Societe des Mines de Loulo SA (Loulo). The Loulo mine is mining from over two underground mines. As of December 31, 2016, Loulo mine has produced 350,604 oz of gold. It has a controlling interest in the Gounkoto mine through Societe des Mines de Gounkoto SA.

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