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Franco-Nevada (FNV) Earnings Miss Estimates in Q1, Shares Down

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Franco-Nevada Corporation’s (FNV - Free Report) shares have declined around 10% since the company reported first-quarter 2022 earnings on May 4. The company reported adjusted earnings of 93 cents per share in the quarter, missing the Zacks Consensus Estimate of 95 cents per share. The bottom line increased 11% year over year.

The company generated revenues of $339 million in the reported quarter, up 10% year over year. The upside was driven by higher realized oil and gas prices from its Energy assets and revenues from the recently-acquired Vale S.A. (VALE - Free Report) Royalty. The top line surpassed the Zacks Consensus Estimate of $333 million. During the March-end quarter, 71.7% of revenues were sourced from Precious Metal assets (55.4% gold, 12.1% silver and 4.2% platinum group metals).

Last April, Franco-Nevada acquired Vale Royalty’s interest. The buyout contributed to the company’s Diversified assets revenues in the first quarter.

The company sold 128,627 Gold Equivalent Ounces (GEOs) from precious metal assets in the reported quarter, down from the prior-year quarter’s 145,969 GEOs. Higher contributions from Guadalupe-Palmarejo and Candelaria were offset by lower deliveries from the Hemlo, Antapaccay and Antamina mines.

During the reported quarter, adjusted EBITDA rose 9% year over year to $287 million.

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 $723 million cash in hand at the end of the first quarter of 2022, up from $539 million reported as of the end of 2021. It recorded an operating cash flow of $231 million in the first quarter of 2022, up from $224 million in the prior-year quarter.

Franco-Nevada is debt-free and uses its free cash flow to expand the portfolio and pay out dividends. FNV now has available capital of $1.7 billion.

Franco-Nevada is on track to meet the current year’s total GEOs guidance between 680,000 and 740,000.

Price Performance

Franco-Nevada’s shares have lost 4.6% in the past year compared with the industry’s decline of 9%.

Zacks Investment Research
Image Source: Zacks Investment Research

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks worth considering in the basic materials space include Steel Dynamics, Inc. (STLD - Free Report) and Commercial Metals Company (CMC - Free Report) .

Steel Dynamics, sporting a Zacks Rank #1 (Strong Buy), has an expected earnings growth rate of 18.5% for the current year. The Zacks Consensus Estimate for STLD's current-year earnings has been revised 32.5% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Steel Dynamics beat the Zacks Consensus Estimate for earnings in each of the last four quarters, the average being roughly 2.5%. STLD has gained around 25% in the past year.

Commercial Metals, carrying a Zacks Rank #1, has a projected earnings growth rate of 78.2% for the current fiscal year. The Zacks Consensus Estimate for CMC's current fiscal year earnings has been revised 31.9% upward over the past 60 days.

Commercial Metals beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing the same in one. It has a trailing four-quarter earnings surprise of roughly 16%, on average. CMC has gained around 21% in a year.

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