Royal Gold, Inc. – Value Analysis (NASDAQ:RGLD) : May 8, 2017

Capitalcube gives Royal Gold, Inc. a score of 59.

Our analysis is based on comparing Royal Gold, Inc. with the following peers – Newmont Mining Corporation, Goldcorp Inc., Barrick Gold Corporation, Silver Wheaton Corp., Coeur Mining, Inc., Vale S.A. Sponsored ADR and Teck Resources Limited Class B (NEM-US, GG-US, ABX-US, SLW-US, CDE-US, VALE-US and TECK-US).

Investment Outlook

Royal Gold, Inc. has a fundamental score of 59 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • Considering peers, relative outperformance over the last year and the last month suggest a leading position.
  • It currently trades at a Price/Book ratio of (1.98).
  • The market expects faster earnings growth from RGLD-US than from its peers and also a turnaround in its current ROE.
  • RGLD-US‘s relatively low net margins and poor asset turns suggest a problematic operating strategy.
  • Changes in annual revenues (relative to peers) are better than the change in its earnings (relative to peers), implying the company is focused more on revenues.
  • Over the last five years, RGLD-US‘s return on assets has eroded from above median to below median among its peers suggesting declining relative operating performance.
  • Company appears to give away relatively high gross margins to relatively high operating costs suggesting a differentiated product portfolio with low pre-tax margins relative to peers.
  • Compared with the peers chosen, RGLD-US has had faster revenue growth in prior years and a current P/E ratio that suggests faster growth in the future suggesting superior growth expectations.
  • The company’s level of capital investment seems appropriate to support the company’s growth.
  • RGLD-US has some amount of debt capacity available.

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Leverage & Liquidity

RGLD-US has some amount of debt capacity available.

  • With debt at a relatively low 14.19% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 20.72%), and a reasonable interest coverage level of 3.60x, RGLD-US has a fair amount of debt capacity available.
  • All 7 peers for the company have an outstanding debt balance.

RGLD-US has maintained its Quick & Able profile from the recent year-end.

  • RGLD-US‘s interest coverage has increased 0.51 points from last year’s low but is still below its five-year average interest coverage of 8.01.
  • The increase in its interest coverage to 3.60x from 3.09x (in 2016) was also accompanied by an increase in its peer median during this period to 3.81x from 3.11x.
  • RGLD-US‘s debt-EV is its highest relative to the last five years and compares to a low of 6.37% in 2012.
  • Though its debt-EV increased to 14.19% from 11.49% (in 2016), its peer median remained relatively stable during this period at 20.72%.
  • Relative to peers, debt-EV rose 2.69 percentage points.

Access the detailed analysis for Royal Gold, Inc.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Newmont Mining Corporation 22.67 3.09 4.03 68.47
Goldcorp Inc. 18.77 1.31 1.31 31.41
Barrick Gold Corporation 25.89 2.97 4.15 43.31
Silver Wheaton Corp. 12.42 6.72 10.27 43.38
Coeur Mining, Inc. 14.85 4.1 2.65 85.93
Vale S.A. Sponsored ADR 57.65 1.9 3.34 40.13
Teck Resources Limited Class B 29.53 1.87 4.91 51.11
Royal Gold, Inc. 14.19 6.1 3.6 40.94
Peer Median 20.72 3.03 3.81 43.34
Best In Class 12.42 6.72 10.27 85.93

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Company Profile

Royal Gold, Inc. engages in the investment, acquisition and management of precious metals royalties and streams. It operates through two business segments: Acquisition and Management of Royalty Interests and Acquisition and Management of Stream Interests. The company was founded on January 5, 1981 and is headquartered in Denver, CO.


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