Royal Gold's (RGLD) Q2 Earnings and Sales Miss Estimates

Royal Gold, Inc. RGLD reported earnings per share of 63 cents in second-quarter fiscal 2020 (ended Dec 30, 2019) missing the Zacks Consensus Estimate of 64 cents by a whisker. The company had reported earnings per share of 36 cents in the prior-year quarter.

The company generated revenues of $123.6 million, up 26.7% year over year. This can be attributed to increase in stream revenues and higher average gold and silver prices. However, the top line missed the Zacks Consensus Estimate of $134 million. Stream revenues came in at $89.6 million, up from the year-ago quarter’s $67.7 million, driven by improvement in gold sales at Andacollo, Pueblo Viejo and Rainy River mine, and higher copper sales at Mount Milligan. However, the gain was partly offset by lower gold sales at Mount Milligan primarily due to timing of deliveries.

The company is focused on a disciplined capital allocation approach, while strengthening balance sheet by paying down debt. Further, strong operating cash flow enabled the company to raise dividend to $1.12 per share for 19th consecutive year. During the reported quarter, Royal Gold witnessed positive developments in Khoemacau project, and solid operating results at Mount Milligan and Rainy River mines.

Royal Gold, Inc. Price, Consensus and EPS Surprise

Royal Gold, Inc. price-consensus-eps-surprise-chart | Royal Gold, Inc. Quote

Operational Highlights

Royal Gold reported volume of 83,500 GEOs (Gold Equivalent Ounces), which increased 4.9% from the year-earlier quarter. Average gold price was up 20.8% to $1,481 per ounce from the year-ago quarter.

The company reported cost of sales of $21 million in the reported quarter, up from the year-ago quarter’s $18 million. General and administrative expenses declined to $6.7 million from $7.4 million reported in the prior-year quarter. Operating profit came in at $53.3 million, up from the $31.4 million reported in the year-ago comparable period.

Financial Position

Net cash provided by operating activities was $78.2 million in second-quarter fiscal 2020 compared with $58.8 million in the prior-year quarter. The company ended the quarter with $80.5 million cash in hand, down from $156.5 million reported at the end of the year-ago quarter. As of the end of the reported quarter, the company’s total debt was around $129.8 million, down from $214.5 million at the end of fiscal 2019. The company paid out dividends worth $17.4 million during the reported quarter.

Share Price Performance

Over the past year, Royal Gold has gained 31.4% compared with the industry’s growth of 38.7%.

Zacks Rank & Other Key Picks

Royal Gold currently Sports a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks in the basic materials space are Daqo New Energy Corp DQ, Sibanye Gold Limited SBGL and Impala Platinum Holdings Limited IMPUY, each flaunting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Daqo New Energy has projected earnings growth rate of 326.3% for the ongoing year. The company’s shares have rallied 70.8% in the past year.

Sibanye Gold has an estimated earnings growth rate of 1,309.4% for the current year. Its shares have returned 160.3% in the past year.

Impala Platinum has an expected earnings growth rate of 465.5% for fiscal 2020. The company’s shares have surged 231.1% over the past year.

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