A month has gone by since the last earnings report for Franco-Nevada (FNV). Shares have lost about 3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Franco-Nevada 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 catalysts.
Franco-Nevada Earnings Miss Estimates in Q1
Franco-Nevada reported adjusted earnings of 93 cents per share in the first-quarter 2022, missing the Zacks Consensus Estimate of 95 cents per share. The bottom line increased 11% year over year.
The company generated revenues of $339 million in the reported quarter, up 10% year over year. The upside was driven by higher realized oil and gas prices from its Energy assets and revenues from the recently-acquired Vale Royalty. The top line surpassed the Zacks Consensus Estimate of $333 million. During the March-end quarter, 71.7% of revenues were sourced from Precious Metal assets (55.4% gold, 12.1% silver and 4.2% platinum group metals).
The company sold 128,627 Gold Equivalent Ounces (GEOs) from precious metal assets in the reported quarter, down from the prior-year quarter’s 145,969 GEOs. Higher contributions from Guadalupe-Palmarejo and Candelaria were offset by lower deliveries from the Hemlo, Antapaccay and Antamina mines.
During the reported quarter, adjusted EBITDA rose 9% year over year to $287 million.
Financial Position
The company had $723 million cash in hand at the end of the first quarter of 2022, up from $539 million reported as of the end of 2021. It recorded an operating cash flow of $231 million in the first quarter of 2022, up from $224 million in the prior-year quarter.
Franco-Nevada is debt-free and uses its free cash flow to expand the portfolio and pay out dividends. FNV now has available capital of $1.7 billion.
Franco-Nevada is on track to meet the current year’s total GEOs guidance between 680,000 and 740,000.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, Franco-Nevada has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of F on the value side, putting it in the lowest 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 broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. 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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