Profit rose 38%, but the stock fell 2.75%—gold prices are climbing and the company is making money, yet shareholders took a hit first.
Franco-Nevada reported its Q3 results this morning (following up on yesterday’s preview post, which cited consensus EPS of $1.77 and revenue of $568.4 million):
1. Revenue was $549.3 million, up 13% year over year, but below expectations of $568.4 million
2. Net income was $395.5 million, or $2.05 per share, up 38% year over year; adjusted EPS was $1.89, beating expectations of $1.77
3. Gold-equivalent ounces sold totaled 130,400, down 6% year over year. Even the CEO acknowledged that deliveries were slightly below expectations
4. Operating cash flow was $429.2 million, up 23%; the quarterly dividend is $0.44, payable on December 17
5. The stock closed at $248.76, down 2.75% on the day
This whale’s take: The company doesn’t mine; it collects royalties. That should make it one of the safest ways to benefit from rising gold prices, with steady returns in all conditions. But the results show that even an effortless win comes with strings attached: gold prices have pulled back nearly 30% from their January highs, deliveries have fallen along with them, and revenue has missed expectations. Even an EPS beat couldn’t save the stock. In the short term, watch whether spot gold can hold above $4,000. Longer term, the question is whether the company can deliver on its full-year guidance within the midpoint range, and whether there’s any new progress on Cobre Panamá. It only looks good if gold prices cooperate. $FNV
Franco-Nevada reported its Q3 results this morning (following up on yesterday’s preview post, which cited consensus EPS of $1.77 and revenue of $568.4 million):
1. Revenue was $549.3 million, up 13% year over year, but below expectations of $568.4 million
2. Net income was $395.5 million, or $2.05 per share, up 38% year over year; adjusted EPS was $1.89, beating expectations of $1.77
3. Gold-equivalent ounces sold totaled 130,400, down 6% year over year. Even the CEO acknowledged that deliveries were slightly below expectations
4. Operating cash flow was $429.2 million, up 23%; the quarterly dividend is $0.44, payable on December 17
5. The stock closed at $248.76, down 2.75% on the day
This whale’s take: The company doesn’t mine; it collects royalties. That should make it one of the safest ways to benefit from rising gold prices, with steady returns in all conditions. But the results show that even an effortless win comes with strings attached: gold prices have pulled back nearly 30% from their January highs, deliveries have fallen along with them, and revenue has missed expectations. Even an EPS beat couldn’t save the stock. In the short term, watch whether spot gold can hold above $4,000. Longer term, the question is whether the company can deliver on its full-year guidance within the midpoint range, and whether there’s any new progress on Cobre Panamá. It only looks good if gold prices cooperate. $FNV
