A month has gone by since the last earnings report for Franco-Nevada (FNV Quick QuoteFNV - Free Report) . Shares have lost about 8% 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 Beats on Q2 Earnings, Hikes 2021 View

Franco-Nevada reported adjusted earnings of 96 cents per share in second-quarter 2021, up 100% from the prior-year period. Additionally, the bottom line surpassed the Zacks Consensus Estimate of 94 cents.

The company generated revenues of $347 million in the reported quarter, reflecting year-over-year growth of 78%. The top-line figure, however, missed the Zacks Consensus Estimate of $362 million. During the June-end quarter, 86.4% of revenues were sourced from gold and gold equivalents (56.2% gold, 13% silver, 6.3% platinum group metals and 10.9% from other mining assets).

The company sold 166,856 GEOs in the reported quarter, up from the prior-year quarter’s 104,330 GEOs. Higher contributions from the company’s largest streams, as well as the addition of Vale’s Royalty Debentures and Condestable stream, were partly offset by lower production from Hemlo mine.

During the reported quarter, adjusted EBITDA climbed 83% to $290 million, year over year.

In second-quarter 2021, the average gold price was $1,816 per ounce, 6.1% higher than the year-ago period. Silver prices averaged $26.69 per ounce in the reported quarter, up 63% year on year. Platinum prices went up 49.3% year over year to $1,180 per ounce, and palladium prices increased 41.8% year on year to $2,788 per ounce.

Financial Position

The company had $198 million cash in hand at the end of second-quarter 2021, down from the $534 million reported as of the end of 2020. It recorded an operating cash flow of $469.5 million in the first half of 2021, up from the $345.4 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 $1.4 billion.

Guidance

The company now expects to achieve current-year GEO sales near the higher end of its guided range of 590,000 GEOs and 615,000 GEOs, up from the prior estimate of 580,000 GEOs to 615,000 GEOs. Given higher commodity prices, Franco-Nevada now expects to generate revenues of $155-$170 million from Energy assets, up from the previous projection of $115-$135 million.

Other Updates

On Apr 16, the company acquired 57 million of Vale’s outstanding participating debentures for $538 million. Moreover, Franco-Nevada accrued 9.9% equity investment in Labrador Iron Ore Royalty Corporation. These investments are accretive to the company’s cash flow.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

VGM Scores

Currently, Franco-Nevada has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, 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 trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Franco-Nevada has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.