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Franco-Nevada (FNV) Up 16.3% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Franco-Nevada (FNV - Free Report) . Shares have added about 16.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Franco-Nevada due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Franco-Nevada Q4 Earnings & Sales Top Estimates, Up Y/Y
Franco-Nevada reported adjusted earnings of 85 cents per share in fourth-quarter 2020, up 44% from the prior-year quarter. Additionally, the bottom line surpassed the Zacks Consensus Estimate of 69 cents.
The company generated revenues of $305 million in the reported quarter, reflecting a year-over-year improvement of 18%. The top-line figure also beat the Zacks Consensus Estimate of $246 million. In the December-end quarter, 90.9% of revenues were sourced from gold and gold equivalents (68.4% gold, 12.5% silver, 6.9% platinum group metals and 3.1% from other mining assets).
The company sold 147,476 Gold Equivalent Ounces (GEOs) in the reported quarter, down from the prior-year quarter’s 153,396 GEOs as higher contributions from the Hemlo, Cobre Panama, Antapaccay and Antamina mines were partly offset by lower contributions from Candelaria and Gold Quarry.
During the reported quarter, adjusted EBITDA increased 25.7% to $254 million year over year.
In fourth-quarter 2020, the average gold price was $1,873 per ounce, 26.6% higher than the year-ago quarter. Silver prices averaged $24.39 per ounce in the quarter, up 40.9% year over year. Platinum prices went up 3.5% year over year to $939 per ounce, while palladium prices jumped 30.4% year on year to $2,348 per ounce.
Financial Position
The company had $534.2 million cash in hand at the end of 2020, up from the $132.1 million reported as of 2019-end. It recorded an operating cash flow of $804 million at the end of 2020, up from the $618 million witnessed at the end of 2019.
Franco-Nevada is debt free and uses its free cash flow to expand the company’s portfolio and payout dividends. The company’s board hiked the quarterly dividend by 15.4% to 30 cents per share, effective for the second quarter of 2021. This marks the 14th consecutive annual dividend increase.
2020 Results
Franco-Nevada reported adjusted earnings per share of $2.71 for 2020 compared with the $1.82 reported in the prior year. Earnings also beat the Zacks Consensus Estimate of $2.54. Sales were up 21% year over year to $1,020 million. The top line surpassed the Zacks Consensus Estimate of $974.5 million.
Guidance
The company now expects attributable royalty and stream sales from its mining assets between 555,000 GEOs and 585,000 GEOs for the current year. The guidance considers continuous ramp-up of Cobre Panama, contributions from recent acquisitions and organic growth across its portfolio. Franco-Nevada expects to generate revenues of $115-$135 million from Energy assets. The WTI oil price and Henry Hub natural gas price are assumed to average $55 per barrel and $2.50 per mcf, respectively.
Other Updates
On Mar 8, the company announced a new precious metals stream related to gold and silver production from the Condestable mine in Peru. On Dec 29, Franco-Nevada acquired a royalty portfolio in the Texas-based Haynesville natural gas play from Mesa Minerals Partners LLC, for $135 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
Currently, Franco-Nevada has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Franco-Nevada has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Franco-Nevada (FNV) Up 16.3% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Franco-Nevada (FNV - Free Report) . Shares have added about 16.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Franco-Nevada due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Franco-Nevada Q4 Earnings & Sales Top Estimates, Up Y/Y
Franco-Nevada reported adjusted earnings of 85 cents per share in fourth-quarter 2020, up 44% from the prior-year quarter. Additionally, the bottom line surpassed the Zacks Consensus Estimate of 69 cents.
The company generated revenues of $305 million in the reported quarter, reflecting a year-over-year improvement of 18%. The top-line figure also beat the Zacks Consensus Estimate of $246 million. In the December-end quarter, 90.9% of revenues were sourced from gold and gold equivalents (68.4% gold, 12.5% silver, 6.9% platinum group metals and 3.1% from other mining assets).
The company sold 147,476 Gold Equivalent Ounces (GEOs) in the reported quarter, down from the prior-year quarter’s 153,396 GEOs as higher contributions from the Hemlo, Cobre Panama, Antapaccay and Antamina mines were partly offset by lower contributions from Candelaria and Gold Quarry.
During the reported quarter, adjusted EBITDA increased 25.7% to $254 million year over year.
In fourth-quarter 2020, the average gold price was $1,873 per ounce, 26.6% higher than the year-ago quarter. Silver prices averaged $24.39 per ounce in the quarter, up 40.9% year over year. Platinum prices went up 3.5% year over year to $939 per ounce, while palladium prices jumped 30.4% year on year to $2,348 per ounce.
Financial Position
The company had $534.2 million cash in hand at the end of 2020, up from the $132.1 million reported as of 2019-end. It recorded an operating cash flow of $804 million at the end of 2020, up from the $618 million witnessed at the end of 2019.
Franco-Nevada is debt free and uses its free cash flow to expand the company’s portfolio and payout dividends. The company’s board hiked the quarterly dividend by 15.4% to 30 cents per share, effective for the second quarter of 2021. This marks the 14th consecutive annual dividend increase.
2020 Results
Franco-Nevada reported adjusted earnings per share of $2.71 for 2020 compared with the $1.82 reported in the prior year. Earnings also beat the Zacks Consensus Estimate of $2.54. Sales were up 21% year over year to $1,020 million. The top line surpassed the Zacks Consensus Estimate of $974.5 million.
Guidance
The company now expects attributable royalty and stream sales from its mining assets between 555,000 GEOs and 585,000 GEOs for the current year. The guidance considers continuous ramp-up of Cobre Panama, contributions from recent acquisitions and organic growth across its portfolio. Franco-Nevada expects to generate revenues of $115-$135 million from Energy assets. The WTI oil price and Henry Hub natural gas price are assumed to average $55 per barrel and $2.50 per mcf, respectively.
Other Updates
On Mar 8, the company announced a new precious metals stream related to gold and silver production from the Condestable mine in Peru. On Dec 29, Franco-Nevada acquired a royalty portfolio in the Texas-based Haynesville natural gas play from Mesa Minerals Partners LLC, for $135 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
Currently, Franco-Nevada has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Franco-Nevada has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.