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Franco-Nevada (FNV) Down 7.9% Since Last Earnings Report: Can It Rebound?

·3 min read

It has been about a month since the last earnings report for Franco-Nevada (FNV). Shares have lost about 7.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Franco-Nevada due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Franco-Nevada Q3 Earnings In Line, '21 Energy View Raised

Franco-Nevada reported adjusted earnings of 87 cents per share in third-quarter 2021, up 9% from the prior-year period. The bottom-line figure came in line with the Zacks Consensus Estimate.

The company generated revenues of $316 million in the reported quarter, reflecting year-over-year growth of 13%. The top-line figure, however, missed the Zacks Consensus Estimate of $323 million. During the September-end quarter, 82.6% of revenues were sourced from gold and gold equivalents (53.5% gold, 13.1% silver, 5.3% platinum group metals and 10.7% from other mining assets).

The company sold 146,495 Gold Equivalent Ounces (GEOs) in the reported quarter, up from the prior-year quarter’s 134,817 GEOs. Higher contributions from Cobre Panama and Antamina, as well as the addition of Vale S. A’s (VALE Quick QuoteVALE - Research Report) Royalty Debentures and Condestable stream, were partly offset by lower deliveries from the Hemlo mine.

During the reported quarter, adjusted EBITDA grew 15% to $269.8 million, year over year.

In third-quarter 2021, the average gold price was $1,789 per ounce, 6.4% lower than the year-ago period. Silver prices averaged $24.36 per ounce in the reported quarter compared with the year-ago quarter’s $24.39. Platinum prices went up 13.4% year over year to $1,024 per ounce, and palladium prices increased 13.3% year on year to $2,459 per ounce.

Financial Position

The company had $347 million cash in hand at the end of third-quarter 2021, down from the $534 million reported as of the end of 2020. It recorded an operating cash flow of $676 million in the first nine months of 2021, up from the $558 million witnessed in the prior-year period.

Franco-Nevada is debt free and uses its free cash flow to expand the company’s portfolio and payout dividends. It now has available capital of $1.6 billion.


The company is on track to achieve its prior GEO guidance of 590,000 GEOs and 615,000 GEOs for the current year. Given the higher oil and gas prices, Franco-Nevada now expects to generate revenues of $195-$205 million from Energy assets, up from the previous projection of $155-$170 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

VGM Scores

At this time, Franco-Nevada has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, 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.


Estimates have been broadly trending downward for the stock, and the magnitude of this revision has been net zero. 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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