A month has gone by since the last earnings report for Royal Gold (RGLD - Free Report) . Shares have added about 4.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Royal Gold due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Royal Gold Q3 Earnings Miss Estimates, Improve Y/Y
Royal Gold adjusted earnings per share of 44 cents in third-quarter fiscal 2019 (ended Mar 31, 2019) missed the Zacks Consensus Estimate by a penny. The company had reported a loss of $2.35 in the prior-year quarter.
Revenues of $110 million in the quarter declined about 5.3% from the $116 million reported in the year-ago quarter. The top-line figure also missed the Zacks Consensus Estimate $117 million. Revenues declined due to lower average gold, silver and copper prices as well as softer stream revenues, mainly resulting from reduced gold and copper sales at Mount Milligan. However, lower sales at Mount Milligan were partly offset by higher gold and silver sales in Pueblo Viejo as well as solid gold sales in Andacollo mines.
Royal Gold’s volume of 84,200 GEOs (Gold Equivalent Ounces) declined 3.6% from the prior-year quarter. Average gold price declined 1.9% to $1,304 per ounce from the year-ago quarter.
The company reported cost of sales of $19.1 million in the reported quarter, down from the year-ago quarter’s $21.3 million. General and administrative expenses contracted to $6.8 million compared with the prior year’s $8.1 million. Operating profit came in at $43.2 million as against the operating loss of $193.4 million reported in the year-ago period.
Net cash provided by operating activities was around $77.4 million in the fiscal third quarter compared with $104.6 million recorded in the prior-year quarter. The company ended the quarter with roughly $216 million cash in hand, up from $89 million reported at the end of fiscal 2018. As of the quarter’s end, the company’s total debt was $363 million, up from $351 million at the end of fiscal 2018. The company paid dividends worth $17.4 million during the quarter.
In February 2019, Royal Gold entered into a silver mine life-purchase agreement with Khoemacau Copper Mining Limited (“KCM’’). The agreement highlights the purchase and sale of silver, produced from the Khoemacau Copper Project in Botswana. Royal Gold expects silver deliveries of 1.5 million ounces per annum at 80% stream rate, with initial deliveries probably starting in the first half of 2021. The transaction will be funded in cash and $1 billion available under a revolving credit facility.
On Feb 27, Centerra Gold Inc. received an amendment to the Mount Milligan environmental assessment certificate that permits access to additional sources of surface water and groundwater. Mount Milligan commenced accessing water from the newly permitted sources in the beginning of April 2019. Further, Centerra expects mill throughput to be at full capacity of 55,000 tons per day, starting mid-May and to remain at that level throughout the remainder of current calendar year.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
At this time, Royal Gold has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.
Royal Gold has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.