Rating Change #6
Royal Gold Inc
has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and deteriorating net income.
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Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 4.0%. Since the same quarter one year prior, revenues slightly increased by 6.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- RGLD's debt-to-equity ratio is very low at 0.13 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 34.31, which clearly demonstrates the ability to cover short-term cash needs.
- ROYAL GOLD INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, ROYAL GOLD INC increased its bottom line by earning $1.60 versus $1.28 in the prior year. This year, the market expects earnings to be in line with last year ($1.60 versus $1.60).
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Metals & Mining industry and the overall market, ROYAL GOLD INC's return on equity is below that of both the industry average and the S&P 500.
- The share price of ROYAL GOLD INC has not done very well: it is down 11.77% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
Royal Gold, Inc., together with its subsidiaries, engages in the acquisition and management of precious metals royalties and similar production based interests. The company has a P/E ratio of 33, above the S&P 500 P/E ratio of 17.7. Royal has a market cap of $3.46 billion and is part of the basic materials sector and metals & mining industry. Shares are down 33.8% year to date as of the close of trading on Friday.
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