Royal Gold, Inc. (RGLD) is a way to capitalize on the rising gold and silver prices without actually owning mining stocks. This Zacks Rank #1 (Strong Buy) is expected to see double digit sales growth in Fiscal 2020.
Royal Gold is not a miner. It is a precious metals stream and royalty company which owns interests, as of Mar 31, 2019, on 191 properties on five continents. That includes interests on 43 producing mines and 17 development stage projects.
What's a metals stream?
From Royal Gold:
"Precious metal streams are purchase agreements with mine operators that provide, in exchange for a lump sum advance payment, the right to purchase all or a portion of one or more metals produced from a mine, at a price determined for the life of the transaction by the purchase agreement."
What's a royalty?
From Royal Gold:
"A royalty is the right to receive a percentage of the metal produced from a mineral property. Existing royalties can be acquired outright from either a mineral resource company or a private party; new royalties can be created by providing capital to an operator or explorer in exchange for a royalty."
Missed Estimates in the Third Quarter
On May 2, Royal Gold reported fiscal third quarter 2019 results and missed on the Zacks Consensus by 3 cents. Earnings were $0.42 versus the Zacks Consensus of $0.45.
The average price of gold of $1,304 per gold ounce, actually decreased 1.9% year-over-year while revenue fell 5.3% to $109.8 million.
The company paid dividends of $17.4 million, an increase of 6.1%.
Here's what its dividend payouts have looked like over an extended period, with the price of gold being that yellow line. From Royal Gold's website:
The current dividend is yielding 1%.
However, gold has hit a 6-year high in the fiscal fourth quarter, which is bullish.
Analysts Raise Estimates
Analysts are liking what they see with rising gold prices as 1 estimate was raised for fiscal 2019 in the last week, even though the company is about to report its fourth quarter results.
That has pushed up the 2019 Zacks Consensus Estimate to $1.55 from $1.52.
It's looking even stronger for fiscal 2020 though. 2 estimates have been revised higher in the last 7 days pushing the Zacks Consensus up to $2.08 from $2.04. That's an earnings increase of 34.5%.
At the end of the third quarter, the company had $216 million in cash and $1.2 billion in available liquidity.
Shares Hit New 52-Week Highs
Gold is back!
And so is interest in investing in it.
Shares of Royal Gold are up 21.5% year-to-date and recently hit a new 52-week high.
The P/E has spiked to 49 but you're not buying it for that. You're in to get the dividend and to get aboard the gold rally.
For investors looking for a way to play the return of gold, Royal Gold is one to keep on your short list.
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