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Franco-Nevada (FNV) Q2 Earnings Beat Estimates, View Up

Zacks Equity Research

Franco-Nevada Corporation FNV delivered adjusted earnings of $64 million or 34 cents per share in second-quarter 2019, up from the prior-year quarter’s $53.7 million or 29 cents per share. In addition, the earnings per share figure surpassed the Zacks Consensus Estimate of 31 cents.

The company generated revenues of $170.5 million in the reported quarter, reflecting year-over-year improvement of 5.7%. The revenue figure missed the Zacks Consensus Estimate of $174 million. In the quarter, 83.8% of revenues were sourced from gold and gold equivalents (62.2% gold, 9.7% silver, 8.6% platinum group metals and 3.3% other mining assets) and 16.2% from energy (oil, gas and natural gas liquids).

The company sold 107,774 Gold Equivalent Ounces (GEOs) in the quarter, up from 107,333 GEOs in the prior-year quarter.

During the reported quarter, adjusted EBITDA increased 9.2% to $137.9 million from $126.3 million in the comparable period last year.

Franco-Nevada Corporation Price, Consensus and EPS Surprise

Franco-Nevada Corporation Price, Consensus and EPS Surprise

Franco-Nevada Corporation price-consensus-eps-surprise-chart | Franco-Nevada Corporation Quote

At the end of theJune-end quarter, average gold price was $1,310 per ounce, approximately 0.3% higher than the year-ago quarter. Silver prices averaged $14.89 per ounce in the quarter, down 10.1% year over year. Platinum too fell 6.8% year over year to $842 per ounce, while palladium prices jumped 41.7% year over year to $1,388 per ounce.

Financial Position

The company ended the April-June quarter with $398.9 million cash in hand, significantly up from $69.7 million reported at the end of 2018. It recorded operating cash flow of $262.7 million for the six-month period ended Jun 30, 2019, compared with $248.8 million reported in the comparable period last year.

Franco-Nevada’s board of directors has announced a quarterly dividend of 25 cents per share. The dividend will be paid on Sep 26, to shareholders of record on Sep 12, 2019.

Business Updates

Cobre Panama project has commenced production of initial gold and silver stream in July, and is expected to produce 140,000-175,000 tons of copper in 2019. The company anticipates the project to be a major growth driver for the second half of the current year.


Franco-Nevada expects GEOs to be at the upper end of the previously-issued guided range of 465,000 GEOs to 500,000 GEOs, driven by strong results so far this fiscal and increase in expected deliveries from the Cobre Panama project. Additionally, the Marcellus royalty acquisition and stellar performance of energy assets aided Franco-Nevada’s revenue expectation for the ongoing year. The company now anticipates to generate $100-$115 million in revenues from its energy assets compared with the prior estimate of $70-$85 million. This guidance reflects WTI oil price of $55 per barrel and a Henry Hub natural gas price of $2.40 per mcf for the remainder of the current year.

Zacks Rank & Other Stocks to Consider

Franco-Nevada currently sports a Zacks Rank #1 (Strong Buy).

A few other top-ranked stocks in the basic materials space are SSR Mining Inc SSRM, Alamos Gold Inc AGI and ArconicInc ARNC, all sporting a Zacks Rank #1, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

SSR Mining has an expected earnings growth rate of 134.8% for 2019. The company’s shares have surged 58.7% in the past year.

Alamos Gold has a projected earnings growth rate of a whopping 260% for the current year. The company’s shares have gained 35.6% in a year’s time.

Arconic has an estimated earnings growth rate of 38.2% for the ongoing year. The stock has moved up 12.2% over the past year.

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