Franco-Nevada Corp.
Franco-Nevada Corporation (NYSE: FNV) is a royalty and streaming firm focused on gold, with a broad portfolio of royalties and streams organized by commodity, area, income kind, and project stage. The Company has a portfolio of royalty, stream, and working interests in properties throughout South America, Central America, and Mexico, as well as the United States, Canada, Australia, Europe, and Africa, at varying levels of development from production to early exploration.
FNV Details
Latest News
- On April 14, 2022, EMX Royalty Corporation announced the completion of a CAD12.58 million (USUSD10 million) private placement with Franco-Nevada Corporation. The money was used to buy an (effective) extra net smelter royalty on the Caserones open-pit mine in northern Chile.
- For an estimated USD37.4 million, FNV agreed to purchase an effective 0.4582 percent NSR royalty on JX Nippon Mining and Metals Group's producing Caserones copper-molybdenum mine in the Atacama Region of northern Chile on April 14, 2022.
Key Takeaways from Q1 FY22 financial results
- FNV generated USD338.8 million in revenue in Q1 2022, up 9.7% from Q1 2021. Higher realized oil and gas prices from the company's Energy holdings, as well as revenue from the company's Vale Royalty assets, drove the company's growth.
- In Q1FY22, FNV’s net income increased to USD 182.0 million vs. USD 171.5 million in Q1FY21.
- Strong Financial Position:
- No debt and USD1.7 billion in available capital as of March 31, 2022.
- Generated USD230.6 million in operating cash flow for the quarter.
- Quarterly dividend of USD0.32/share.
Key Risk
- Regulatory Risk: FNV is a gold mining firm that is governed by several federal and state laws. As a result, tighter rules or non-compliance with needed legislation might have a negative impact on the company's profitability.
- Metal Price: The company is exposed to volatility in the underlying metal prices primarily gold, any adverse move in the underlying commodity could also dent the group’s overall performance.
Outlook
2022 Guidance (Q1FY22 Earnings)
Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation
Source: REFINTIV, Analysis by Kalkine Group
*% Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.
Stock Recommendation
Over the past three months, GPN's share price has corrected by only 9.25%. The stock is currently leaning towards the lower end of its 52-week range of USD 124.95 to USD 169.32. The current price is below both short-term (50-day) SMA and long-term (200-day) SMA with an RSI of 45.26. We have valued the stock using the EV/EBITDA multiple-based relative valuation method and arrived at a target price of USD 167.62. We believe that the company is trading at a high premium from its peer's average considering strong fundamentals, and a good cash position giving bullish estimates for the upcoming near future.
Considering the strong fundamentals, robust top-line results, associated risks, positive outlook, and current valuation, we give a "Hold" recommendation on the stock at the closing price of USD 140.44, up 0.56% as of June 17, 2022, as of 09:15 AM PDT.
1-Year Technical Chart, as of June 17, 2022, at 09:15 AM PDT. Data Source: REFINITIV, Analysis by Kalkine Group
Note 1: The reference data in this report has been partly sourced from REFINITIV.
Note 2: Investment decision should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above.
Note 3: The report publishing date is as per the Pacific Time Zone.
Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.
Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.
There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.
You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.
The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.
Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.
Please also read our Terms & Conditions and Financial Services Guide for further information.
On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine and its related entities do not hold interests in any of the securities or other financial products covered on the Kalkine website unless those persons comply with certain safeguards, procedures, and disclosures.
Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.