Royal Gold (RGLD) Q1 Earnings Miss Estimates, Improve Y/Y

Royal Gold, Inc.’s (NASDAQ:RGLD) adjusted earnings per share of 44 cents in third-quarter fiscal 2019 (ended Mar 31, 2019) missed the Zacks Consensus Estimate by a penny. The company had reported a loss of $2.35 in the prior-year quarter.

Revenues of $110 million in the quarter declined about 5.3% from the $116 million reported in the year-ago quarter. The top-line figure also missed the Zacks Consensus Estimate $117 million. Revenues declined due to lower average gold, silver and copper prices as well as softer stream revenues, mainly resulting from reduced gold and copper sales at Mount Milligan. However, lower sales at Mount Milligan were partly offset by higher gold and silver sales in Pueblo Viejo as well as solid gold sales in Andacollo mines.

Royal Gold, Inc. Price, Consensus and EPS Surprise

Operational Highlights

Royal Gold’s volume of 84,200 GEOs (Gold Equivalent Ounces) declined 3.6% from the prior-year quarter. Average gold price declined 1.9% to $1,304 per ounce from the year-ago quarter.

The company reported cost of sales of $19.1 million in the reported quarter, down from the year-ago quarter’s $21.3 million. General and administrative expenses contracted to $6.8 million compared with the prior year’s $8.1 million. Operating profit came in at $43.2 million as against the operating loss of $193.4 million reported in the year-ago period.

Financial Position

Net cash provided by operating activities was around $77.4 million in the fiscal third quarter compared with $104.6 million recorded in the prior-year quarter. The company ended the quarter with roughly $216 million cash in hand, up from $89 million reported at the end of fiscal 2018. As of the quarter’s end, the company’s total debt was $363 million, up from $351 million at the end of fiscal 2018. The company paid dividends worth $17.4 million during the quarter.

Recent Developments

In February 2019, Royal Gold entered into a silver mine life-purchase agreement with Khoemacau Copper Mining Limited (“KCM’’). The agreement highlights the purchase and sale of silver, produced from the Khoemacau Copper Project in Botswana. Royal Gold expects silver deliveries of 1.5 million ounces per annum at 80% stream rate, with initial deliveries probably starting in the first half of 2021. The transaction will be funded in cash and $1 billion available under a revolving credit facility.

On Feb 27, Centerra Gold Inc. received an amendment to the Mount Milligan environmental assessment certificate that permits access to additional sources of surface water and groundwater. Mount Milligan commenced accessing water from the newly permitted sources in the beginning of April 2019. Further, Centerra expects mill throughput to be at full capacity of 55,000 tons per day, starting mid-May and to remain at that level throughout the remainder of current calendar year.

Over the past year, Royal Gold’s stock has declined around 7.7%, compared to the industry’s loss of 7.6%.

Zacks Rank & Stocks to Consider

Royal Gold currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the Basic Materials space are Sandstorm Gold Ltd (NYSE:SAND) , Arconic Inc. (NYSE:ARNC) and Arch Coal Inc. (NYSE:ARCH) . While Sandstorm Gold sports a Zacks Rank #1 (Strong Buy), Arconic and Arch Coal carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Sandstorm Gold has an expected earnings growth rate of 189% for 2019. The company’s shares have gained 8.3% in the past year.

Arconic has an estimated earnings growth rate of 3.5% for the current year. The company’s shares have appreciated 25.8% in a year’s time.

Arch Coal has a projected earnings growth rate of 5.49% for 2019. Its shares have rallied 22.3% over the past time.

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