Rating Change #8
has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its poor profit margins and relatively poor performance when compared with the S&P 500 during the past year.
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Highlights from the ratings report include:
- The gross profit margin for FRANCO-NEVADA CORP is rather low; currently it is at 22.30%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, FNV's net profit margin of -29.00% significantly underperformed when compared to the industry average.
- In its most recent trading session, FNV has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.2%. Since the same quarter one year prior, revenues slightly dropped by 3.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- When compared to other companies in the Metals & Mining industry and the overall market, FRANCO-NEVADA CORP's return on equity is below that of both the industry average and the S&P 500.
- FRANCO-NEVADA CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. During the past fiscal year, FRANCO-NEVADA CORP turned its bottom line around by earning $0.70 versus -$0.46 in the prior year.
Franco-Nevada Corporation operates as a gold-focused royalty and stream company in the United States, Canada, Mexico, Australia, and Africa. The company has interests in platinum group metal, oil and gas, and other resource properties. The company has a P/E ratio of 61.3, above the S&P 500 P/E ratio of 17.7. Franco-Nevada has a market cap of $6.38 billion and is part of the basic materials sector and metals & mining industry. Shares are down 27.1% year to date as of the close of trading on Thursday.
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