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Franco-Nevada (FNV) Q4 Earnings & Sales Top Estimates, Up Y/Y

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Franco-Nevada Corporation (FNV - Free Report) reported adjusted earnings of 85 cents per share in fourth-quarter 2020, up 44% from the prior-year quarter. Additionally, the bottom line surpassed the Zacks Consensus Estimate of 69 cents.

The company generated revenues of $305 million in the reported quarter, reflecting a year-over-year improvement of 18%. The top-line figure also beat the Zacks Consensus Estimate of $246 million. In the December-end quarter, 90.9% of revenues were sourced from gold and gold equivalents (68.4% gold, 12.5% silver, 6.9% platinum group metals and 3.1% from other mining assets).
 

FrancoNevada Corporation Price, Consensus and EPS Surprise

FrancoNevada Corporation Price, Consensus and EPS Surprise

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

The company sold 147,476 Gold Equivalent Ounces (GEOs) in the reported quarter, down from the prior-year quarter’s 153,396 GEOs as higher contributions from the Hemlo, Cobre Panama, Antapaccay and Antamina mines were partly offset by lower contributions from Candelaria and Gold Quarry.

During the reported quarter, adjusted EBITDA increased 25.7% to $254 million year over year.

 

In fourth-quarter 2020, the average gold price was $1,873 per ounce, 26.6% higher than the year-ago quarter. Silver prices averaged $24.39 per ounce in the quarter, up 40.9% year over year. Platinum prices went up 3.5% year over year to $939 per ounce, while palladium prices jumped 30.4% year on year to $2,348 per ounce.

Financial Position

The company had $534.2 million cash in hand at the end of 2020, up from the $132.1 million reported as of 2019-end. It recorded an operating cash flow of $804 million at the end of 2020, up from the $618 million witnessed at the end of 2019.

Franco-Nevada is debt free and uses its free cash flow to expand the company’s portfolio and payout dividends. The company’s board hiked the quarterly dividend by 15.4% to 30 cents per share, effective for the second quarter of 2021. This marks the 14th consecutive annual dividend increase.

2020 Results

Franco-Nevada reported adjusted earnings per share of $2.71 for 2020 compared with the $1.82 reported in the prior year. Earnings also beat the Zacks Consensus Estimate of $2.54. Sales were up 21% year over year to $1,020 million. The top line surpassed the Zacks Consensus Estimate of $974.5 million.

Guidance

The company now expects attributable royalty and stream sales from its mining assets between 555,000 GEOs and 585,000 GEOs for the current year. The guidance considers continuous ramp-up of Cobre Panama, contributions from recent acquisitions and organic growth across its portfolio. Franco-Nevada expects to generate revenues of $115-$135 million from Energy assets. The WTI oil price and Henry Hub natural gas price are assumed to average $55 per barrel and $2.50 per mcf, respectively.

Other Updates

On Mar 8, the company announced a new precious metals stream related to gold and silver production from the Condestable mine in Peru. On Dec 29, Franco-Nevada acquired a royalty portfolio in the Texas-based Haynesville natural gas play from Mesa Minerals Partners LLC, for $135 million.

Price Performance

Franco-Nevada’s shares have gained 18.2% over the past year compared with the industry’s growth of 34.9%.



Zacks Rank & Stocks to Consider

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

Better-ranked stocks in the basic materials space include Impala Platinum Holdings Limited (IMPUY - Free Report) , Fortescue Metals Group Limited (FSUGY - Free Report) and BHP Group (BHP - Free Report) . All of these stocks sport a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Impala Platinum has an expected earnings growth rate of 195.9% for the current fiscal year. The company’s shares have surged 84% in the past year.

Fortescue has a projected earnings growth rate of 84.3% for the current fiscal year. The company’s shares have soared 182% in a year’s time.

BHP Group has an estimated earnings growth rate of 65.6% for the current fiscal year. The company’s shares have appreciated 75% over the past year.

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