Get the Latest Investment Ideas Delivered Straight to Your Inbox. Subscribe


Analysts View Franco-Nevada's Q1 Earnings as Strong Start to 2017

Share on Stocktwits


Franco-Nevada's Q1/17 earnings beat expectations and analysts say the company is off to a good start in 2017.

Franco-Nevada Corp. (FNV:TSX; FNV:NYSE) released earnings for the first quarter of 2017 on May 9. It announced that it sold a record 131,578 gold equivalent ounces, a 23.4% increase year-over-year, and booked $172.7 million in revenue, also a record and a 30.8% year-over-year increase. The company also announced that it was raising its dividend to $0.23/share from the previous $0.22/share, the 10th consecutive annual dividend increase.

These results were welcomed by analysts. Analyst Michael Siperco of Macquarie Research wrote on May 10 that the first quarter results "continue to highlight the strength of FNV's portfolio of 46 producing mines, 41 advanced projects and +190 exploration assets, as well as the growing oil & gas portfolio. With EBITDA margins of ~75%, we continue to view FNV as a defensive way to get precious metal exposure, while maintaining significant optionality to higher prices in the exploration/early stage portfolio and increasing dividends."

Siperco also wrote that while Franco-Nevada trades at a premium to its peers, "we expect the premium to be maintained on continued growth from the diversified portfolio through 2020. While producers should outperform FNV (and the royalty/stream sector) if gold/silver prices rally in 2H17 (as we forecast), we believe that FNV will continue to be a core holding for investors looking for low-risk exposure to precious metals in a dividend-paying vehicle."

Macquarie has an Outperform rating on Franco-Nevada and a target price of CA$95.

Analyst Andrew Kaip of BMO Capital Markets noted that Franco's earnings per share of $0.26 were "well above our estimate of $0.16 and consensus of $0.22 on the back of much higher-than-expected revenue from all metal segments and Oil & Gas." He also noted that Franco-Nevada "finished the quarter with $283M in cash and equivalents and has access to $1.1B in credit facilities."

Kaip stated that "we believe shares of FNV should outperform peers on Q1 results and have increased our target price to $100." Franco-Nevada is currently trading around $94.

Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

1) Patrice Fusillo compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or members of her immediate household or family own, shares of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are sponsor of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own shares of Franco-Nevada Corp., a company mentioned in this article.

Want to read more about Gold and Silver investment ideas?
Get Our Streetwise Reports Newsletter Free and be the first to know!

A valid email address is required to subscribe