Royal Gold Inc (RGLD) Stock Analysis and Metrics

Sector: Basic Materials Industry: Gold CIK: 0000085535

Market Cap 14.71 Bn

P/B 10.07

P/E 206.02

P/S 67.95

ROIC (Qtr) 12.31

Div Yield % 0.34

Rev 1y % (Qtr) 30.04

Total Debt (Qtr) 770.20 Mn

Debt/Equity (Qtr) 0.23

About

Royal Gold Inc. (RGLD) is a prominent player in the precious metal royalty industry. The company's primary business activities involve acquiring existing stream and royalty interests or financing mining projects in exchange for these interests. This approach allows Royal Gold to generate revenue without the operational responsibilities and costs associated with mining. Royal Gold's revenue model is primarily tied to the price of gold, with approximately 76% of its 2023 revenue coming from this precious metal. Silver and copper contribute 12% and...

Royal Gold Inc. (RGLD) is a prominent player in the precious metal royalty industry. The company's primary business activities involve acquiring existing stream and royalty interests or financing mining projects in exchange for these interests. This approach allows Royal Gold to generate revenue without the operational responsibilities and costs associated with mining.

Royal Gold's revenue model is primarily tied to the price of gold, with approximately 76% of its 2023 revenue coming from this precious metal. Silver and copper contribute 12% and 9% respectively, with the remaining 3% derived from other minerals. The company operates in a highly competitive industry, vying for stream and royalty interests with other companies, mine operators, and financial buyers.

The company's operations are divided into two segments: Acquisition and Management of Stream Interests, and Acquisition and Management of Royalty Interests. The Stream Interests segment accounted for 69% of Royal Gold's total revenue in 2023, with interests on eight production stage properties and one development stage property. The Royalty Interests segment, which includes interests on 29 production stage properties, 21 development stage properties, and 119 exploration stage properties, contributed 31% of the company's total revenue in the same year.

Royal Gold's competitive edge lies in its ability to provide financing to mining projects in exchange for stream or royalty interests. This approach allows the company to generate revenue without the operational burdens and costs associated with mining. However, the mining industry is subject to various environmental, mine safety, land use, waste disposal, remediation, and public health laws and regulations. Non-compliance by operators can lead to legal consequences, impacting the company's revenue.

Royal Gold values its human capital resources, employing a diverse and experienced workforce of 30 employees. The company's human capital management strategy focuses on attracting and retaining top talent, offering competitive compensation and benefits, and providing education and professional development programs.

Royal Gold's brand portfolio includes a range of products and services. Its stream interests are tied to various mining projects, while its royalty interests span across multiple production, development, and exploration stage properties. The company's diverse portfolio and strategic approach to acquisitions and management set it apart in the competitive mining industry.

Price action

Investment thesis

Bull case

Strong operating cash flow of 604.19M provides robust 0.78x coverage of total debt 770.20M, indicating excellent debt servicing capability and financial flexibility.
Operating cash flow of 604.19M provides exceptional 114.02x coverage of minority interest expenses 5.30M, showing strong core operations.
Operating cash flow of 604.19M provides exceptional 47.44x coverage of interest expenses 12.73M, showing strong debt service capability.
Operating cash flow of 604.19M provides strong 52.85x coverage of stock compensation 11.43M, indicating sustainable incentive practices.
Strong tangible asset base of 4.47B provides 5.80x coverage of total debt 770.20M, indicating robust asset backing and low credit risk.

Bear case

Operating cash flow of 604.19M barely covers its investment activities of (1.20B), with a coverage ratio of -0.50, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
Operating cash flow of 604.19M provides thin coverage of dividend payments of (115.20M) with a -5.24 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
Cash reserves of 172.85M provide limited coverage of acquisition spending of (1.21B), which is -0.14x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
High receivables of 69.70M relative to inventory of 21.01M (3.32 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
High financing cash flow of 644.64M relative to working capital of 187.83M, which is 3.43x suggests concerning dependence on external funding for operational needs.

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Gold

S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	NEM	NEWMONT Corp /DE/	92.44 Bn	45.40	7.57	5.65 Bn
2	B	Barrick Mining Corp	76.96 Bn	15.41	4.54	4.70 Bn
3	WPM	Wheaton Precious Metals Corp.	61.71 Bn	61.61	33.72	0.01 Bn
4	AEM	Agnico Eagle Mines Ltd	47.57 Bn	61.82	12.38	0.34 Bn
5	FNV	FRANCO NEVADA Corp	44.75 Bn	48.65	28.94	0.00 Bn
6	KGC	Kinross Gold Corp	39.48 Bn	22.44	6.13	1.24 Bn
7	PAAS	Pan American Silver Corp	20.12 Bn	31.73	6.18	0.86 Bn
8	AGI	Alamos Gold Inc	16.77 Bn	31.14	10.42	0.28 Bn

Industry comparisons

Current Valuation	Value	Ind Avg
EV to Assets EV to Assets	3.32	3.24
EV to Cash from Ops. EV/CFO	100.90	-9.75
EV to Debt EV to Debt	19.25	538.62
EV to EBIT EV/EBIT	125.55	13.99
EV to EBITDA EV/EBITDA	79.58	3.53
EV to Free Cash Flow [EV/FCF] EV/FCF	-111.45	9.65
EV to Market Cap EV to Market Cap	1.01	1.17
EV to Revenue EV/Rev	68.50	8.77
Price to Book Value [P/B] P/B	10.07	6.25
Price to Earnings [P/E] P/E	206.02	2.29

Dividend Metrics	Value	Ind Avg
Dividend Coverage Ratio Div Coverage (Qtr)	3.98	1.56
Dividend Payout Ratio % Div Payout % (Qtr)	24.00	5.23
Dividend per Basic Share Div per Share (Qtr)	1.80	0.17
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr)	19.59	10.03
Interest Coverage Int. cover (Qtr)	45.06	406.36

Growth Metrics	Value	Ind Avg
Capex Growth (1y) % Capex 1y % (Qtr)	0.00	-97.51
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr)	35.16	132.70
Dividend Growth (1y) % Div 1y % (Qtr)	12.50	-5.81
EBIAT Growth (1y) % EBIAT 1y % (Qtr)	65.96	515.87
EBITDA Growth (1y) % EBITDA 1y % (Qtr)	31.24	51.77
EBIT Growth (1y) % EBIT 1y % (Qtr)	49.77	678.32
EBT Growth (1y) % EBT 1y % (Qtr)	52.13	143.06
EPS Growth (1y) % EPS 1y % (Qtr)	66.97	225.30
FCF Growth (1y) % FCF 1y % (Qtr)	23.42	181.86
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr)	30.96	85.33

Liquidity Ratios	Value	Ind Avg
Asset Utilization Ratio Asset Util Ratio (Qtr)	0.19	0.26
Cash Payout Ratio Cash Payout (Qtr)	0.19	0.03
Cash Ratio Cash Ratio (Qtr)	1.74	3.07
Current Ratio Curr Ratio (Qtr)	2.89	4.83
Debt to Equity Ratio Debt/Equity (Qtr)	0.23	0.27
Interest Cover Ratio Int Coverage (Qtr)	45.06	406.36
Times Interest Earned Times Interest Earned (Qtr)	45.06	406.36

Profitability	Value	Ind Avg
EBITDA Margin % EBITDA Margin % (Qtr)	82.20	-19.76
EBIT Margin % EBIT Margin % (Qtr)	66.90	-44.58
EBT Margin % EBT Margin % (Qtr)	65.42	-34.78
Gross Margin % Gross Margin % (Qtr)	86.80	30.79
Net Profit Margin % Net Margin % (Qtr)	56.00	-40.46

Research Tools

Royal Gold Inc (NASDAQ: RGLD)

About

Price action

Investment thesis

Bull case

Bear case

Segments Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Industry comparisons

Research Tools

Royal Gold Inc (NASDAQ: RGLD)

About

Price action

Investment thesis

Bull case

Bear case

Segments Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Industry comparisons

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