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NEM vs. AEM: Which Gold Mining Stock Should You Invest in Now?
NEMNewmont(NEM) ZACKS·2025-05-07 11:10

Core Insights - Newmont Corporation (NEM) and Agnico Eagle Mines Limited (AEM) are key players in the gold mining industry, with both companies benefiting from rising gold prices due to global economic uncertainties and trade tensions [1][2] - Gold prices have increased approximately 30% this year, reaching a record high of 3,500perounce,influencedbyaggressivetradepoliciesandcentralbankgoldaccumulation[2]−AcomparisonofthefundamentalsofNEMandAEMisessentialforinvestorslookingforopportunitiesinthepreciousmetalssector[3]NewmontCorporation(NEM)−NEMisactivelyinvestingingrowthprojects,includingtheTanamiExpansion2inAustraliaandtheAhafoNorthexpansioninGhana,aimedatincreasingproductioncapacityandextendingminelife[4]−TheacquisitionofNewcrestMiningLimitedhasenhancedNEM′sportfolio,expectedtogenerate3,500 per ounce, influenced by aggressive trade policies and central bank gold accumulation [2] - A comparison of the fundamentals of NEM and AEM is essential for investors looking for opportunities in the precious metals sector [3] Newmont Corporation (NEM) - NEM is actively investing in growth projects, including the Tanami Expansion 2 in Australia and the Ahafo North expansion in Ghana, aimed at increasing production capacity and extending mine life [4] - The acquisition of Newcrest Mining Limited has enhanced NEM's portfolio, expected to generate 500 million in annual run-rate synergies [5] - NEM's attributable gold production rose approximately 9% year over year in Q4, with significant divestitures generating total after-tax cash proceeds of 4.3billion[6]−NEMreportedliquidityof4.3 billion [6] - NEM reported liquidity of 8.8 billion and operating cash flow of around 2billioninQ1,witharecordfreecashflowof2 billion in Q1, with a record free cash flow of 1.2 billion [7] - The company returned 1billiontoshareholdersthroughdividendsandsharerepurchases,maintainingadividendyieldof1.91 billion to shareholders through dividends and share repurchases, maintaining a dividend yield of 1.9% and a payout ratio of 24% [8] Agnico Eagle Mines Limited (AEM) - AEM is focused on advancing key projects such as the Odyssey project and the Hope Bay Project, which is expected to significantly contribute to cash flow [9][10] - AEM's operating cash flow increased by approximately 33% year over year to 1,044 million in Q1, with free cash flow rising around 50% to 594million[11]−AEMreturnedabout594 million [11] - AEM returned about 920 million to shareholders last year and $251 million in Q1, offering a dividend yield of 1.4% and a five-year annualized dividend growth rate of 10.3% [12] Price Performance and Valuation - Year-to-date, NEM stock has increased by 46.7%, while AEM stock has risen by 52.3%, outperforming the Zacks Mining – Gold industry's increase of 44.8% [13] - NEM is trading at a forward 12-month earnings multiple of 13.04, which is an 11.4% discount compared to the industry average of 14.72 [14] - AEM is trading at a forward earnings multiple of 19.9, indicating a premium over NEM [17] Growth Projections - The Zacks Consensus Estimate for NEM's 2025 sales and EPS implies a year-over-year rise of 0.1% and 14.9%, respectively [18] - AEM's 2025 sales and EPS estimates suggest year-over-year growth of 20.6% and 44.4%, respectively, indicating stronger growth potential [19] Investment Considerations - Both NEM and AEM are well-positioned to benefit from rising gold prices, but AEM's higher earnings growth projections and lower leverage suggest it may be a more favorable investment option [22] - AEM currently holds a Zacks Rank 1 (Strong Buy), while NEM has a Zacks Rank 2 (Buy) [23]