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Royal Gold's (RGLD) Q3 Earnings Beat, Sales Miss Estimates

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Royal Gold, Inc. (RGLD - Free Report) reported adjusted earnings per share of 68 cents in third-quarter fiscal 2020 (ended Mar 31, 2020), beating the Zacks Consensus Estimate of 58 cents. The company had reported earnings per share of 42 cents in the prior-year quarter.

The company generated revenues of $136 million, up 24.3% year over year. Stream revenues increased 25.3% to $97.5 million, while royalty revenues were up 22% to $39 million, year over year. This can be attributed to the increase in average gold and silver prices, as well as a rise in gold sales at the Andacollo and Pueblo Viejo mines and higher copper sales at the Mount Milligan mine. These were partly offset by lower gold sales at Rainy River and Mount Milligan due to a decrease in deliveries. However, the top line missed the Zacks Consensus Estimate of $141 million.

Royal Gold Inc Price, Consensus and EPS Surprise

Operational Highlights

Royal Gold reported volume of 86,200 GEOs (Gold Equivalent Ounces), up 2.4% from the year-earlier quarter. Average gold price was up 21.4% to $1,583 per ounce from the year-ago quarter.

The company reported cost of sales of $22 million in the fiscal third quarter, up from the year-ago quarter’s $19 million. General and administrative expenses flared up to $9.6 million from the $6.8 million reported in the prior-year quarter. Operating profit came in at $52.3 million, up from the $43.2 million reported in the year-ago period.

Financial Position

Net cash from operating activities was $99.7 million in the fiscal third quarter compared with the prior-year quarter’s $77.4 million. Royal Gold ended the quarter with $94 million cash in hand, down from the $119 million reported at the end of fiscal 2019. As of the end of the reported quarter, the company’s total debt was $100.2 million, down from the $214.5 million at the end of fiscal 2019. The company paid out dividends worth $18.4 million during the reported quarter. Royal Gold’s strong balance sheet and liquidity position place it well to navigate through the coronavirus-induced crisis. As of Mar 31, 2020, the company had $105 million outstanding and $895 million available under its revolving credit facility. In April, it withdrew $200 million from its revolving credit facility, resulting in a total of $305 million outstanding and $695 million available. The drawdown was a precautionary measure to strengthen cash position and support continued business activities.

Price Performance

Over the past year, Royal Gold has gained 63.6% compared with the industry’s growth of 86.3%.

Zacks Rank & Other Stocks to Consider

Royal Gold currently carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the basic materials space are Newmont Corporation (NEM - Free Report) , Barrick Gold Corporation (GOLD - Free Report) and Franco-Nevada Corporation (FNV - Free Report) , each currently carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Newmont has an expected earnings growth rate of 90.2% for 2020. The company’s shares have surged 103.6% in the past year.

Barrick Gold has an estimated earnings growth rate of 60.8% for the ongoing year. Its shares have soared 112.7% over the past year.

Franco-Nevada has a projected earnings growth rate of 19.2% for the current year. The company’s shares have appreciated 92.5% in a year’s time.

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