Royal Gold (RGLD:NAS) Fundamental Valuation Report

Fundamental Valuation Report

Royal Gold(RGLD:NAS)

Basic Materials:Gold

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$73.69 (USD) 09/11/2018

Weighted Valuation
$100.38 (USD)

Overall Rating
Undervalued by 36.2%

Valuation Models Analyst Consensus: $134.62 (USD)
(in order of importance) Discounted Cash Flow: $59.33 (USD)
Comparables: $79.79 (USD)
Valuation Methods This company is:
Cash Flow: Overvalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation

Company Overview (RGLD:NAS USD)

Price 73.69
Range 73.02 – 74.19
52 week 72.61 – 95.78
Open 73.76
Vol / Avg. 495721/535176
Mkt cap 4.83B
P/E 0.00
Div/yield 0.99/0.01
EPS -1.73
Shares 65.51M
Beta 0.44

Company Description

Royal Gold Inc enquires and manages precious metal royalties and streams, with a focus on gold. The company operates by purchasing a percentage of the metal produced from a mineral property for an initial payment, without assuming responsibility of mining operations. Similarly, precious metal streams are purchase agreements with mine operators providing the right to purchase all or a portion of one or more metals produced from a mine, in exchange for an upfront deposit payment. Generally Royal Gold does not conduct any work on the properties in which it holds royalty and streaming assets. The company owns a portfolio of producing, development, evaluation, and exploration royalties and streams, and the majority of group revenue is generated from Canada, Mexico, Chile, and the United States.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for RGLD:NAS

Using a discounted cash flow model we generated an intrinsic value of $59.33 (USD) for RGLD:NAS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

RGLD:NAS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $59.33 1% 5% 1% 5%
WACC (or Ke) 7.58 $77.34 $47.36
Terminal Growth Rate 2.60 $48.18 $76.08
Tax Rate 0.14 $64.42 $54.24
Cash Flow 557,122,750 $52.53 $66.12
Capital Expenditures -271,418,000 $56.32 $62.33
Long Term Debt 674,029,000 $59.84 $58.81

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $34.73 (USD) for RGLD:NAS. We also generated a valuation of $79.79 (USD) using other metrics and comparables.
The comparable companies were and Newmont Mining (NEM:NYS).

Company RGLD:NAS End Date Value
Earnings/Share ($1.94) (USD)
Book Value/Share $32.09 (USD)
Sales/Share $7.03 (USD)
Cash Flow/Share $5.04 (USD)
EBITDA/Share $1.43 (USD)
Price Based on Comps Adjustment Factor (%)
$0.00 (USD) 18.6
$49.87 (USD) -21.8
$16.38 (USD) 35.3
$35.46 (USD) 74.9
$11.69 (USD) 0.0
RGLD:NAS Ratios Used Average Values NEM:NYS
0.00 PE Ratio 0.00 0.00
2.39 PB Ratio 1.55 1.55
10.90 PS Ratio 2.33 2.33
15.22 PCF Ratio 8.11 8.11
56.60 EV to EBITDA 8.19 8.19

Multiples

Using a multiples approach we generated a valuation of  $71.97 (USD) for RGLD:NAS

Company RGLD:NAS End Date Value
Earnings/Share ($1.94) (USD)
Book Value/Share $32.09 (USD)
Sales/Share $7.03 (USD)
Cash Flow/Share $5.04 (USD)
EBITDA/Share $1.43 (USD)
Price Based on Comps Adjustment Factor
$0.00 (USD) 0
$66.52 (USD) 0
$86.55 (USD) 0
$103.13 (USD) 0
$31.68 (USD) 0
Ratios Ratio Average
PE Ratio 69.00
PB Ratio 2.07
PS Ratio 12.31
PCF Ratio 20.48
EV to EBITDA 22.17

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  RGLD:NAS for the last 10 years was  2.09

We ran the Adjusted Book Value for  RGLD:NAS and generated a book value of  $32.18 (USD)
By multiplying these we get an adjusted valuation of  $67.37 (USD)

Analyst Data

In the Stockcalc database there are 2 analysts that provide a valuation for RGLD:NAS. The 2 analysts have a concensus valuation for RGLD:NAS for 2019 of $134.62 (USD).

RGLD:NAS Royal Gold

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
2 0 0 5.0000 Buy 2018-11-8

Current Price: 73.69 USD

Analyst Consensus
USD Millions 2019 2020
Mean EPS 2.71 3.20
# EPS Analysts 2 2
Mean Revenue 645.70 653.50
# Revenue Analysts 1 1
Mean Target Price 134.62
Mean Cash Flow 6.04 6.68
Mean EBITDA 533.20 503.20
Mean Net Income 189.50 217.00
Mean Debt Outstanding
Mean Tax Rate
Mean Growth Rate
Mean Capital Expenditure

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

Notice to User


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