Alamos Gold Inc. (AGI) engages in the acquisition, exploration, development, and extraction of precious metals in Canada and Mexico. The company is based in Toronto, Canada and primarily explores for gold deposits. The company posted operating revenues of $332.60 million, exceeding analysts' estimates of $293.46 million. And its EPS came in at $0.24 for the quarter, higher than the consensus estimate of $0.19.
During the second quarter, Alamos’ Gold production exceeded the quarterly guidance of 123,000 to 133,000 ounces and increased by 2.3% year-over-year to 139,100 ounces, and its Gold sales improved 6.8% from the year-ago value to 140,923 ounces. Also, the average realized gold price was $2,336, up from the prior year's quarter value of $1,978.
The company recently updated its three-year production, operating, and capital guidance, raising consolidated gold production by 13% to range between 550,000 and 590,000 ounces from the prior range of 485,000 – 525,000 ounces. Subsequently, the company has raised the consolidated gold production range for 2025 and 2026 to 575,000 – 625,000 ounces and 630,000 – 680,000 ounces.
In the last quarter, AGI also provided an exploration update at Young-Davidson, having intersected a new style of higher-grade gold mineralization from the mid-mine. It also completed the acquisition of Argonaut and acquired Argonaut's Magino mine, located adjacent to Alamos’ Island Gold mine in Ontario, Canada. And continued to strengthen its footprint in North American mines with expanding operations.
Further, the company’s prospects are robust, backed by high volatility in gold prices touching record highs. Gold surpassed the $2,600 level during September for the first time, extending the rally. The market was further boosted by recent Fed interest rate cuts and hopes for further U.S. interest rate cuts, coupled with rising tensions in the Middle East.
Amid gold's impressive jump observed through the year, gold seems poised for further gains, and is forecasted to range from $2,600 to $2,800 per ounce this year.
John A. McCluskey, President and Chief Executive Officer, said, “Alamos delivered a record performance in the second quarter. Production exceeded quarterly guidance, increasing to a record 139,100 ounces. We also continue to create value through exploration and our various growth initiatives.”
“The Phase 3+ Expansion is progressing well, and the integration of Island Gold with our recently acquired Magino mine is well underway. We expect the integration of the two operations to drive substantial synergies and unlock significant longer-term upside potential supported by the broad-based exploration success we are seeing across the Island Gold District.”
Shares of AGI have gained 31% over the past six months and 59.7% over the past year to close its last trading session at $19.64.
Let’s look at factors that could influence AGI’s performance in the upcoming months.
Positive Recent Developments
On September 4, AGI reported new results from ongoing surface exploration drilling within the Mulatos District, emphasizing defining higher-grade mineralization at Puerto Del Aire and Cerro Pelon. It was reported that the 2024 drill program successfully expanded high-grade mineralization beyond the historical drilling in multiple oxide and sulphide zones.
On July 23, AGI reported results from underground and surface drilling at the Island Gold Mine. The exploration drilling continued to extend high-grade gold mineralization across the Island Gold Deposit and within several hanging wall and footwall structures. The findings are expected to drive further growth in high-grade Mineral Reserves and Resources with the year-end update.
Solid Financials
For the second quarter that ended June 30, 2024, AGI’s operating revenues increased 27.4% year-over-year to $332.60 million. Also, its earnings from operations increased 56.7% from the prior quarter’s quarter to $138.80 million. Its EBITDA rose 29.9% year-over-year to $180.50 million.
Furthermore, the company’s adjusted net earnings came in at $96.90 million and $0.24 per share, indicating 63.4% and 60% increases from the prior year's quarter, respectively. AGI’s free cash flow grew 73.5% from the year-ago value to $106.90 million.
Also, the company’s cash and cash equivalents stood at $313.60 million as of June 30, 2024, compared to $224.80 million as of December 31, 2023.
Impressive Historical Growth
AGI’s revenue grew at a CAGR of 8.9% over the past three years, while its EBITDA improved at a CAGR of 6.4%. Its EBIT increased at a CAGR of 7.5% over the same period, while the company's net income and EPS grew at respective CAGRs of 103.7% and 102.9% over the same time frame.
In addition, the company’s tangible book value and total assets increased at CAGRs of 4.1% and 5.8% over the same timeframe, respectively.
Favorable Analyst Estimates
Analysts expect AGI’s revenue for the third quarter (ended September 2024) to come in at $367.80 million, indicating an increase of 43.6% year-over-year. The consensus EPS estimate of $0.22 for the same period reflects a 54.4% year-over-year improvement. Moreover, the company topped consensus EPS estimates in all four trailing quarters, which is remarkable.
For the fiscal year (ending December 2024), the company’s revenue and EPS are anticipated to grow 30.6% and 54.3% year-over-year to $1.34 billion and $0.82, respectively. In addition, Street expects its revenue and EPS for the fiscal year 2025 to grow 15% and 34.5% from the prior year to $1.54 billion and $1.10, respectively.
High Profitability
AGI’s trailing-12-month EBIT margin of 33.43% is 206.6% higher than the 10.90% industry average. Its trailing-12-month net income margin of 17.73% is significantly higher than the industry average of 5.05%. Likewise, the stock’s trailing-12-month levered FCF margin of 13.23% is 158.8% higher than the industry average of 5.11%.
Furthermore, the stock's trailing-12-month ROCE, ROTC, and ROTA of 6.72%, 7.92%, and 4.77% are higher than the 5.96%, 4.96%, and 2.40% industry average, respectively.
POWR Ratings Reflect Promise
AGI’s solid prospects are reflected in its POWR Ratings. The stock has an overall rating of A, translating to a Strong Buy in our proprietary system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. AGI has an A grade for Sentiment, consistent with its optimistic analyst estimates.
The stock also has a B grade for Growth and Quality, which is in sync with its robust financial performance and higher profitability relative to its peers.
AGI is ranked #8 among the 42 stocks in the B-rated Miners - Gold industry.
Beyond what I have stated above, we have also given AGI grades for Momentum, Stability, Growth, and Value. Get access to all the AGI ratings here.
Bottom Line
AGI reported impressive production increase in the last reported quarter and with surging gold prices, the market is currently in its favor. Further, the company’s long-term prospects appear promising, driven by solid demand, expanding business operations, strategic initiatives, and solid financial performance.
Given AGI’s strong financial performance, accelerating profitability, strong market position, and robust growth outlook, it could be wise to invest in this stock.
How Does Alamos Gold Inc. (AGI) Stack Up Against Its Peers?
While AGI has an overall POWR Rating of A, investors could also check out these other stocks within the B-rated Miners - Gold industry with A (Strong Buy) or B (Buy) ratings: Jaguar Mining Inc. (JAGGF), Dundee Precious Metals Inc. (DPMLF), and Kinross Gold Corporation (KGF).
For exploring more A and B-rated miners stocks, click here.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
AGI shares were trading at $19.56 per share on Tuesday afternoon, down $0.08 (-0.41%). Year-to-date, AGI has gained 45.90%, versus a 22.99% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
Should You Bet on Alamos Gold’s Consistent Production Gains? StockNews.com
