Royal Gold Inc. Stock Upgraded (RGLD)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

NEW YORK ( TheStreet) -- Royal Gold (Nasdaq: RGLD) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

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Highlights from the ratings report include:
  • 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 25.32, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for ROYAL GOLD INC is currently very high, coming in at 96.84%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 26.89% significantly outperformed against the industry average.
  • ROYAL GOLD INC's earnings per share declined by 43.9% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, ROYAL GOLD INC reported lower earnings of $1.09 versus $1.60 in the prior year. This year, the market expects an improvement in earnings ($1.26 versus $1.09).
  • The revenue fell significantly faster than the industry average of 3.4%. Since the same quarter one year prior, revenues fell by 27.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, ROYAL GOLD INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

Royal Gold, Inc., together with its subsidiaries, engages in the acquisition and management of precious metals royalties, precious metals streams, and similar interests. The company has a P/E ratio of 61.6, above the S&P 500 P/E ratio of 17.7. Royal has a market cap of $3.61 billion and is part of the basic materials sector and metals & mining industry. Shares are up 21.5% year to date as of the close of trading on Monday.

You can view the full Royal Ratings Report or get investment ideas from our investment research center.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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