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Franco-Nevada (FNV) Q3 Earnings & Sales Top Estimates, Up Y/Y

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Zacks Equity Research
·4 min read
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Franco-Nevada Corporation FNV reported adjusted earnings of 80 cents per share in third-quarter 2020, up 48.1% from the prior-year quarter. Additionally, the bottom line surpassed the Zacks Consensus Estimate of 59 cents.

The company generated revenues of $279.8 million in the reported quarter, reflecting a year-over-year improvement of 18.6%. The top-line figure also beat the Zacks Consensus Estimate of $246 million. In the third quarter, 91.9% of revenues were sourced from gold and gold equivalents (73.7% gold, 9.3% silver, 7.6% platinum group metals and 1.3% from other mining assets) and 8.1% from energy (oil, gas and natural gas liquids).

The company sold 134,817 Gold Equivalent Ounces (GEOs) in the reported quarter, up from the prior-year quarter’s 133,219 GEOs. This year-over-year growth of 1.2% resulted from higher contributions from the Hemlo and Candelaria mines, offset by lower contributions from Cobre Panama and Sabodala.

During the reported quarter, adjusted EBITDA increased 22% to $235 million year over year.

In third-quarter 2020, the average gold price was $1,911 per ounce, 29.6% higher than the year-ago quarter. Silver prices averaged $24.39 per ounce in the quarter, up 43.3% year over year. Platinum prices went up 2.3% year over year to $903 per ounce, palladium prices jumped 41.6% year on year to $2,170 per ounce.

FrancoNevada Corporation Price, Consensus and EPS Surprise

FrancoNevada Corporation Price, Consensus and EPS Surprise
FrancoNevada Corporation Price, Consensus and EPS Surprise

FrancoNevada Corporation price-consensus-eps-surprise-chart | FrancoNevada Corporation Quote

Financial Position

The company had $466.8 million cash in hand as of Sep 30, 2020, up from the $132.1 million reported as of Dec 31, 2019. It recorded an operating cash flow of $557.6 million in the first nine months of the current year, up from the $433.1 million witnessed in the comparable period last year.

Franco-Nevada is debt free and uses its free cash flow to expand the company’s portfolio and pay dividends. The company’s board has announced a quarterly dividend of 26 cents per share, payable on Dec 17 to shareholders of record as of Dec 3, 2020.

Guidance

The company now expects attributable royalty and stream sales from its mining assets to lie near the upper end of the prior guidance of 475,000 GEOs and 505,000 GEOs for the current year. The guidance considers the resumption of the Candelaria mine operation in the near term which is temporarily on hold due to labor strikes. Revenues from energy assets are anticipated to be at the higher end of the previous estimate of $60-$75 million in 2020. The WTI oil price and Henry Hub natural gas price are assumed to average $40 per barrel and $2.00 per mcf, respectively.

Price Performance

Franco-Nevada’s shares have appreciated 44.3% over the past year compared with the industry’s growth of 47.5%.



Zacks Rank & Stocks to Consider

Franco-Nevada currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Agnico Eagle Mines Limited AEM, Newmont Corporation NEM and Barrick Gold Corporation GOLD. While Agnico Eagle Mines and Newmont sport a Zacks Rank #1 (Strong Buy), Barrick Gold carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Agnico Eagle Mines Limited has an expected earnings growth rate of a whopping 103% for the current year. The company’s shares have rallied 38% over the past year.

Newmont has a projected earnings growth rate of 98% for 2020. The company’s shares have gained 72% in a year’s time.

Barrick Gold has an estimated earnings growth rate of 99% for the ongoing year. Its shares have appreciated 67% in the past year.

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