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Franco-Nevada Corporation Message Board

  • investora2z investora2z Apr 9, 2013 1:17 PM Flag

    $46 has to be crossed with volumes

    The last quarter performance was not very good with the revenues falling around 4% to $114 million. This has accelerated the decline in the stock. The current market price is lower than the 200 DMA of $54 and the 50 DMA of $46. This indicates the technical weakness of the stock. The fall has been backed by volumes and the 10 day average of 364K is higher than the 3 month average of 311K. It has fallen from the 52 week high of $61.60 in October 2012 to the current levels of around $43. The big picture is markedly different from this small 6 month one. The long term charts show that the stock was in an uptrend from October 2008 when the price was around $10. Thus, it multiplied 6 times in 5 years before the current corrective phase started. These companies in the streaming / mining business take off exponentially after they acquire some good asset or contract or start production. Till that time, they are available at very low valuations. Companies like Bullfrog Gold Corporation (BFGC) which own assets with high potential are presently available at low valuations. FNV is always on lookout for contracts / assets which will add to its long term growth story. It has recently made a $1 billion commitment in Cobre Panama. For FNV, the growth party has been spoiled by the recent downtrend. A look at the fundamentals tells us that the profit margin is 24%, and it is a debt free company with $779 million in cash (as on December 31). Current ratio is in excess of 15, and the book value per share is $21.46 (P/B less than 2). However, the current P/E is 60 which is pretty high, and the price to sales is also high at 14.64. Thus the valuations of FNV appear to be a little stretched. In any case, it has to cross $46 decisively for any reversal in trend.

64.86+0.78(+1.22%)Oct 25 4:02 PMEDT