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Royal Gold (RGLD) Down 9.9% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Royal Gold (RGLD - Free Report) . Shares have lost about 9.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Royal Gold 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.

Royal Gold Q1 Earnings Top, Up Y/Y On Higher Prices

Royal Gold reported adjusted earnings per share of 82 cents in first-quarter fiscal 2021 (ended Sep 30, 2020), beating the Zacks Consensus Estimate of 80 cents. The bottom-line increased 36.7% year over year.

Including one-time items, the company reported earnings per share of $1.63 compared with the prior-year quarter’s $1.07.

The company generated revenues of $147 million, reflecting year-over-year growth of 23.7%. Stream revenues increased 23% year over year to $107 million, while royalty revenues were up 25% to $40 million year over year. Gains from higher average gold, silver and copper prices contributed to this top-line growth.

Operational Highlights

Royal Gold reported volume of 76,900 GEOs (Gold Equivalent Ounces), down 4.6% from the year-earlier quarter. Average gold price was up 29.7% to $1,909 per ounce from the year-ago quarter.

The company’s cost of sales was up 10% year over year to $22 million in the fiscal first quarter, primarily on year-over-year increases in gold, silver and copper prices.

General and administrative expenses came in at $7 million, flat year on year. Adjusted EBITDA was $117 million, up from the year-ago period’s $91 million.

Financial Position

Net cash from operating activities was $94 million in the fiscal first quarter compared with the prior-year quarter’s $71 million. The company paid out dividends worth $18.4 million during fiscal first quarter. Royal Gold ended the reported quarter with $413 million cash in hand, up from the $319 million witnessed at the end of fiscal 2020.

At the end of the reported quarter, the company’s total debt was $271 million, down from the $300 million recorded at the end of fiscal 2020. As of Sep 30, 2020, Royal Gold had $725 million available and $275 million outstanding under the revolving credit facility with total liquidity of $1.1 billion.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -9.41% due to these changes.

VGM Scores

Currently, Royal Gold has a nice Growth Score of B, though it is lagging a lot 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Royal Gold has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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