It has been about a month since the last earnings report for Royal Gold (RGLD - Free Report) . Shares have lost about 10.5% 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 drivers. <p style="text-align: justify;"><strong>Royal Gold Q4 Earnings In Line, Sales Miss Estimates</strong><br /><br />Royal Gold’s adjusted earnings per share of 43 cents per share in fourth-quarter fiscal 2018 came in line with the Zacks Consensus Estimate but was up 39% year over year.<br /><br />Barring one-time items, the company reported earnings of 41 cents per share in the reported quarter, improving 32% year over year.<br /><br />Royal Gold reported revenues of $116 million in the fiscal fourth quarter, up about 7% from the $109 million reported in the year-ago quarter. Revenue increased due to higher gold and copper prices as well as increased stream sales from Mount Milligan and Pueblo Viejo, partially offset by lower metal sales from Wassa and Prestea, and Andacollo. However, the figure missed the Zacks Consensus Estimate of $118 million.<br /><br /><strong>Operational Highlights</strong><br /><br />Royal Gold’s volume of 89,000 GEOs (Gold Equivalent Ounces) improved 3% from the prior-year quarter. Average gold price increased 4% to $1,306 per ounce from the year-ago quarter<br /><br />The company reported costs of sales of $22.2 million in the reported quarter, up from the year-ago quarter figure of $19.7 million. General and administrative expenses increased to $10.9 million, compared with $9.9 million in the prior-fiscal quarter.<br /><br /><strong>Fiscal 2018 Performance</strong><br /><br />Royal Gold’s adjusted earnings per share came in at $1.76 in fiscal 2018, beating the Zacks Consensus Estimate of $1.75. Earnings also improved 14% year over year. Including one-time items, the company reported net loss per share of $1.73 in the fiscal compared with $1.55 in the prior year.<br /><br />Fiscal 2018 revenues were a record $459 million, advancing 4% from the prior fiscal but missed the Zacks Consensus Estimate of $472 million.<br /><br /><strong>Financial Position</strong><br /><br />Net cash provided by continuing operating activities increased 23% year over year to $329 million in the fiscal 2018. The company ended the fiscal with roughly $88.8 million cash in hand, up from $86 million at fiscal 2017-end. As of fiscal 2018-end, the company’s total debt was $351 million, lower than $586 million at fiscal 2017 end. The company has paid dividends worth $64 million during the year.<br /><br /><strong>Outlook</strong><br /><br />For fiscal 2019, the company expects improved results backed by several positive catalysts, including the beginning of production at Cortez Crossroads, the early deployment of the Peñasquito Pyrite Leach Project and production improvements at Rainy River. It will be aided further by progress at the pilot pre-oxidation plant at Pueblo Viejo, as well as a preliminary economic assessment at the Peak Gold joint venture.</p>
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -6.25% due to these changes.
Currently, Royal Gold has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
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.