Franco-Nevada Corporation’s FNV shares have improved around 3% since it reported first-quarter 2024 earnings on May 1. This uptick was driven by the company’s outstanding margin performance, supported by rising gold prices, despite experiencing year-over-year declines in revenues and earnings.
Adjusted earnings of 76 cents per share beat the Zacks Consensus Estimate of 68 cents. The 4% year-over-year decline in its bottom line was mainly attributed to lower Gold Equivalent Ounces (GEOs) sold in the quarter. Notably, FNV’s adjusted net income margin came in at 56.9% in the first quarter of 2024, indicating a year-over-year expansion of 180 basis points.
The company generated revenues of $257 million in the reported quarter, down 7.1% year over year. Increased gold prices were offset by fewer GEOs sold in the quarter. In the March-end quarter, 78.7% of revenues were sourced from Precious Metal assets (62.7% gold, 9.7% silver and 3.1% platinum group metals).
FNV sold 93,018 GEOs from Precious Metal assets in the reported quarter, down 16% from the prior-year quarter. The downside was due to lower deliveries from Cobre Panama (as the mine remains in preservation and safe management) and Antamina, partially offset by higher contributions from Antapaccay, Guadalupe-Palmarejo and Subika.
In the reported quarter, the adjusted EBITDA was down 5.8% year over year to $216 million. Adjusted EBITDA margin was 84.2% in the quarter, indicating an expansion from 83% in the first quarter of 2023.
Franco-Nevada Corporation Price, Consensus and EPS Surprise
Franco-Nevada Corporation price-consensus-eps-surprise-chart | Franco-Nevada Corporation Quote
Financial Position
The company had $1.35 billion of cash in hand at the end of the first quarter of 2024, down from $1.42 billion as of the end of 2023. It recorded an operating cash flow of $179 million in the first quarter of 2024, down from $210 million at the end of 2023.
Franco-Nevada is debt-free and uses its free cash flow to expand its portfolio and pay out dividends. FNV now has an available capital of $2.3 billion.
Guidance
At the end of the fourth quarter of 2033, Franco-Nevada projected total GEOs between 480,000 and 540,000 for 2024. GEOs from Precious Metal assets are expected between 360,000 and 400,000. It reported total GEOs of 498,447 in 2023. The outlook indicates lower expected oil and gas prices.
Price Performance
Franco-Nevada’s shares have lost 20.8% in the past year compared with the industry’s decline of 3.5%.
Image Source: Zacks Investment Research
Zacks Rank
Franco-Nevada currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Peer Stocks
Barrick Gold Corporation GOLD recorded net earnings (on a reported basis) of $295 million or 17 cents per share in first-quarter 2024. The figure improved from $120 million or 7 cents per share in the year-ago quarter.
Barrick recorded total sales of $2,747 million, up 4% year over year. The figure missed the Zacks Consensus Estimate of $2,932 million.
Agnico Eagle Mines Limited AEM reported adjusted earnings of 76 cents per share in first-quarter 2024, up from 57 cents in the year-ago quarter. The bottom line topped the Zacks Consensus Estimate of 60 cents.
The company generated revenues of $1,829.8 million, up nearly 21% year over year. The top line surpassed the Zacks Consensus Estimate of $1,622 million.
Galiano Gold Inc. GAU reported an adjusted loss of 2 cents per share in first-quarter 2024, in line with the Zacks Consensus Estimate. The company reported adjusted earnings of 4 cents in the year-ago quarter.
The company generated revenues of $32 million in the quarter.
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