AEM vs. KGC: Which Gold Mining Stock is the Better Bet Now?
Agnico Eagle Mines Limited AEM and Kinross Gold Corporation KGC are two prominent players in the gold mining space with global operations. Gold prices have skyrocketed to unprecedented levels this year, driven by global economic uncertainties and trade and geopolitical tensions. Against this backdrop, comparing these two major gold producers is particularly relevant for investors seeking exposure to the precious metals sector.Gold prices have hit new highs driven by a surge in safe-haven demand amid the intense trade tussle, geopolitical tensions, a weak dollar and increased purchases by central banks. The Federal Reserve’s interest rate reduction by a quarter of a percentage point, prospects of more rate cuts this year, along with growing concerns over a protracted U.S. government shutdown and heightened U.S.-China trade tensions, have triggered the recent rally, driving prices north of $4,000 per ton for the first time. Prices of the yellow metal have surged roughly 54% this year and are currently hovering near $4,100 per ton. Let’s dive deep and closely compare the fundamentals of these two Canada-based gold miners to determine which one is a better investment now.The Case for Agnico EagleAgnico Eagle is focused on executing projects that are expected to provide additional growth in production and cash flows. It is 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. The Hope Bay Project, with proven and probable mineral reserves of 3.4 million ounces, is expected to play a significant role in generating cash flow in the years to come. The processing plant expansion at Meliadine was completed and commissioned in the second half of 2024, with mill capacity expected to increase to roughly 6,250 tons per day in 2025. The merger with Kirkland Lake Gold established Agnico Eagle as the industry's highest-quality senior gold producer. The integrated entity now has an extensive pipeline of development and exploration projects to drive sustainable growth. It also has the financial flexibility to fund a strong pipeline of growth projects.AEM has a robust liquidity position and generates substantial cash flows, which enable it to maintain a strong exploration budget, finance a strong pipeline of growth projects, pay down debt and drive shareholder value. Its operating cash flow for the second quarter was $1.85 billion, up 92% from $961 million a year ago.AEM recorded second-quarter free cash flow of roughly $1.3 billion, more than doubling the prior-year quarter figure of $557 million. The increase was backed by the strength in gold prices and robust operational results. The company remains focused on paying down debt using excess cash, with a sequential reduction of $550 million in long-term debt to $595 million at the end of the second quarter. It ended the quarter with a significant net cash position of $963 million, driven by the increase in cash position and reduction in debt. AEM also returned around $300 million in the second quarter. AEM offers a dividend yield of 1% at the current stock price. It has a five-year annualized dividend growth rate of 3.2% and a payout ratio of 27% (a ratio below 60% is a good indicator that the dividend will be sustainable).The Case for KinrossKinross has a strong production profile and boasts a promising pipeline of exploration and development projects. Its key development projects and exploration programs, including Great Bear in Ontario and Round Mountain Phase X in Nevada, remain on track. These projects are expected to boost production and cash flow and deliver significant value. The successful execution of these projects will position the company for a new wave of low-cost, long-life production. Tasiast and Paracatu, the company’s two biggest assets, are the key contributors to cash flow generation and production. Tasiast remains the lowest-cost asset within its portfolio, with a consistently strong performance. It achieved record annual production and cash flow in 2024 and is on track to meet its full-year 2025 guidance. Paracatu continues to deliver a strong performance, with second-quarter production rising on higher grades and improved mill recoveries. KGC also completed the commissioning of its Manh Choh project and commenced production during the third quarter of 2024, leading to a substantial increase in cash flow at the Fort Knox operation.KGC has a strong liquidity position and generates substantial cash flows, which allows it to finance its development projects, pay down debt and drive shareholder value. KGC ended second-quarter 2025 with robust liquidity of roughly $2.8 billion, including cash and cash equivalents of more than $1.1 billion. Second-quarter free cash flow surged approximately 87% year over year and 74% from the preceding quarter, driven by the strength in gold prices and strong operating performance. KGC reactivated its share buyback program in April 2025 and repurchased shares worth roughly $225 million as of July 30, 2025, including $170 million in shares in the second quarter. Total returns to shareholders, including dividends, were around $300 million. It plans to return at least $650 million through dividends and repurchases this year. Kinross repaid $800 million of debt during 2024 and the remaining $200 million of its term loan in the first quarter of 2025. Moreover, KGC's net debt position improved to around $100 million at the end of the second quarter from $540 million in the prior quarter. KGC offers a dividend yield of 0.5% at the current stock price. It has a payout ratio of 10%.Price Performance and Valuation of AEM & KGCYear to date, AEM stock has jumped 109.1%, while KGC stock has rallied 154.2% compared with the Zacks Mining – Gold industry’s increase of 114.1%. Image Source: Zacks Investment ResearchAEM is currently trading at a forward 12-month earnings multiple of 20.98, modestly higher than its five-year median. This represents a roughly 41.8% premium when stacked up with the industry average of 14.79X. Image Source: Zacks Investment ResearchKinross looks more attractively priced than Agnico Eagle. KGC stock is currently trading at a forward 12-month earnings multiple of 14.49, below the industry. Image Source: Zacks Investment ResearchKGC’s return on equity of 20% is higher than AEM’s 13.8%. This reflects Kinross’ efficient use of shareholder funds in generating profits. Image Source: Zacks Investment ResearchHow Does Zacks Consensus Estimate Compare for AEM & KGC?The Zacks Consensus Estimate for AEM’s 2025 sales and EPS implies a year-over-year rise of 30.8% and 69%, respectively. The EPS estimates for 2025 have been trending higher over the past 60 days. Image Source: Zacks Investment ResearchThe consensus estimate for KGC’s 2025 sales and EPS indicates year-over-year growth of 26.9% and 111.8%, respectively. The EPS estimates for 2025 have been trending northward over the past 60 days. Image Source: Zacks Investment ResearchAEM or KGC: Which is a Better Pick?Both AEM and KGC are well-positioned to benefit from the current favorable gold price environment, each demonstrating strong financial performance and commitment to shareholder returns. However, Kinross appears to have an edge over Agnico Eagle due to its more attractive valuation. KGC’s higher ROE also indicates that it is more effectively utilizing shareholder funds. In addition, KGC’s higher earnings growth projections suggest that it may offer better investment prospects in the current market environment. Investors seeking exposure to the gold space might consider Kinross as the more favorable option at this time.AEM currently carries a Zacks Rank #2 (Buy), whereas KGC sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Radical New Technology Could Hand Investors Huge GainsQuantum Computing is the next technological revolution, and it could be even more advanced than AI.While some believed the technology was years away, it is already present and moving fast. 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Click to get this free report Kinross Gold Corporation (KGC): Free Stock Analysis Report Agnico Eagle Mines Limited (AEM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks
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