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Why Is Franco-Nevada (FNV) Up 7.4% Since Last Earnings Report?

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It has been about a month since the last earnings report for Franco-Nevada (FNV - Free Report) . Shares have added about 7.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Franco-Nevada due for a pullback? 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 Q1 Earnings & Revenue Estimates

Franco-Nevada delivered adjusted earnings of $65.2 million or 35 cents per share in first-quarter 2019, up from the prior-year quarter’s $63.9 million or 34 cents per share. In addition, the EPS figure surpassed the Zacks Consensus Estimate of 28 cents.

The company generated revenues of $179.8 million in the reported quarter, reflecting year-over-year improvement of 3.8%. The revenue figure also beat the Zacks Consensus Estimate of $166 million. In the first quarter, 88.4% of revenues were sourced from gold and gold equivalents (63.4% gold, 11.1% silver, 10.6% platinum group metals and 3.3% other mining assets) and 11.6% from energy (oil, gas and natural gas liquids).

The company sold 122,049 Gold Equivalent Ounces (GEOs) in the quarter, up 5.5% from 115,671 GEOs in the prior-year quarter.

During the March-end quarter, adjusted EBITDA inched up 0.7% to $140.9 million from $139.9 million witnessed in the comparable period last year.

Prices
 
At the end of the first quarter, average gold price was $1,304 per ounce, approximately 1.8% lower than the year-ago quarter. Silver prices averaged $15.57 per ounce in the quarter, down 7.1% year over year. Platinum too fell 15.8% year over year to $823 per ounce, while palladium prices jumped 38.6% year over year to $1,435 per ounce.

Financial Position

The company ended the first quarter with $72.6 million cash in hand, up from $69.7 million reported at the end of 2018. It recorded operating cash flow of $143.6 million for the three-month period ended Mar 31, 2019, compared with $137.5 million reported in the prior-year period.

Franco-Nevada’s board of directors has announced a quarterly dividend of 25 cents per share, showing an increase of 4.2% from its last payout. The company has increased its dividend for the 12th consecutive year. The raised dividend will be paid on Jun 27, to shareholders of record on Jun 13, 2019.

Cobre Panama project begins its initial production in the first-quarter, and expects to produce 140,000-175,000 tons of copper for Cobre Panama in 2019. The company forecasts milling operation at an annualized rate of 72 million tons per year, by the end of this year. The company expects this project to reach its mill throughput capacity of 100 million tons per year in 2023.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

Currently, Franco-Nevada has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, 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 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 this revision 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.


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