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Franco-Nevada (FNV) Hits 52-Week High: What's Driving It?

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Shares of Franco-Nevada Corporation (FNV - Free Report) scaled a fresh 52-week high of $101.19 on Sep 4, before eventually closing at $98.82.

The company has a market cap of roughly $18.9 billion. Average volume of shares traded in the past three months was around 581.39K.
 

The stock has gained 43.8% in the past year compared with the industry’s rally of 55.8%.

What’s Driving the Rally?

Robust second-quarter results, upbeat outlook for revenues from its energy assets and higher gold prices so far this year have contributed to Franco-Nevada’s shares.

Franco-Nevada Corporation Price

 

Franco-Nevada Corporation Price

Franco-Nevada Corporation price | Franco-Nevada Corporation Quote

The company delivered stellar earnings results for the June-end quarter. It reported adjusted earnings of $64 million or 34 cents per share, up from the prior-year quarter’s $53.7 million or 29 cents per share. In addition, earnings per share figure surpassed the Zacks Consensus Estimate of 31 cents.
 
Moreover, the company generated revenues of $170.5 million in the reported quarter, reflecting year-over-year improvement of 5.7%.

The company now expects to generate $100-$115 million in revenues from energy assets compared with the prior estimate of $70-$85 million, driven by the Marcellus royalty acquisition and stellar performance of energy assets. With the continued development of its U.S. oil & gas assets, the company forecasts energy assets to contribute 16-17% of revenues by 2023.

Franco-Nevada has completed its $1-billion commitment for the Cobre Panama project. In July, Cobre Panama commenced production of initial gold and silver stream and is likely to produce 140,000-175,000 tons of copper in the current year. Further, the project is anticipated to be a major growth driver for the second half of this year. For 2019, the company estimates to produce upper end of the prior guidance of 20,000-40,000 ounces gold from the project.

Franco-Nevada expects Gold Equivalent Ounces (GEOs) to be at the upper end of the previously-issued guidance of 465,000-500,000 GEOs, driven by strong results so far, and increase in expected deliveries from the project.

Moreover, gold prices have been currently trending above $1,500 an ounce — levels last seen in 2013. The prolonged trade war, current slowdown in manufacturing activity and a weaker dollar have collectively helped lift the yellow metal's investment appeal. The combination of lower mined gold supply and higher demand, and geopolitical tensions could eventually drive prices north. Moreover, anticipation for rate cuts work in gold's favor. This has also fueled the appreciation in Franco-Nevada’s share price.

Earnings estimates for Franco-Nevada for 2019 and fiscal 2020 have moved up 20% and 22% respectively over the past 30 days. The Zacks Consensus Estimate for 2019 earnings is currently pegged at $1.57 per share, indicating an improvement of of 34.19% from the year-ago quarter. The same for the fiscal 2020 stands at $1.86, suggesting growth of 18.79% from the year-ago reported figure.

Zacks Rank & Other Key Picks

Franco-Nevada currently carries a Zacks Rank #1 (Strong Buy).

Other top-ranked stocks in the same industry are Kirkland Lake Gold Ltd. (KL - Free Report) , Agnico Eagle Mines Limited (AEM - Free Report) and Barrick Gold Corporation (GOLD - Free Report) . While Kirkland Lake Gold is a Zacks Ranked #1 stock, Agnico Eagle Mines and Barrick Gold carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kirkland Lake Gold has an expected earnings growth of 69.85% for the current fiscal. The Zacks Consensus Estimate for the current fiscal has moved up 4% over the last 30 days. The stock has soared 181% in a year’s time.

Agnico Eagle Mines has an estimated earnings growth of 157.14% for the current fiscal. The estimate moved up 7% over the past 30 days. Shares of this company have surged 97% over the past year.

Barrick Gold has estimated earnings growth of 54.29% for fiscal 2019. The estimate has gone up 17% over the past 30 days. The company’s shares have appreciated 102% in a year’s time.

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