Yahoo Finance Earnings Update: Royal Gold, Inc. (NASDAQ:RGLD) Just Reported Its Third-Quarter Results And Analysts Are Updating Their Forecasts
It's been a good week for Royal Gold, Inc. (NASDAQ:RGLD) shareholders, because the company has just released its latest third-quarter results, and the shares gained 9.0% to US$136. It was a workmanlike result, with revenues of US$136m coming in 2.1% ahead of expectations, and statutory earnings per share of US$0.59, in line with analyst appraisals. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
See our latest analysis for Royal Gold
Following the latest results, Royal Gold's seven analysts are now forecasting revenues of US$590.7m in 2021. This would be a huge 20% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to soar 21% to US$3.26. Before this earnings report, the analysts had been forecasting revenues of US$619.3m and earnings per share (EPS) of US$4.45 in 2021. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a pretty serious reduction to earnings per share numbers.
Despite the cuts to forecast earnings, there was no real change to the US$121 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Royal Gold, with the most bullish analyst valuing it at US$155 and the most bearish at US$90.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Royal Gold'sgrowth to accelerate, with the forecast 20% growth ranking favourably alongside historical growth of 9.3% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.4% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Royal Gold is expected to grow much faster than its industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Royal Gold. They also downgraded their revenue estimates, although industry data suggests that Royal Gold's revenues are expected to grow faster than the wider industry. The consensus price target held steady at US$121, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Royal Gold analysts - going out to 2022, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 1 warning sign for Royal Gold you should know about.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
