Royal Gold (NASDAQ:RGLD) stands out as one of the premier gold royalty companies and streamers, consistently delivering robust and reliable results over time.
By the end of 2023, the company’s portfolio had expanded to encompass 178 properties, offering geographical and operational diversity. This portfolio includes 37 producing mines, 22 development properties, 52 evaluation properties, and 67 exploration sites.
Geographically, Royal Gold’s principal properties span the globe, with key locations in the U.S., Canada, Chile, Botswana, the Dominican Republic, and Mexico.
Over the past decade, Royal Gold has achieved impressive revenue growth, averaging 11.2% annually (excluding outliers in 2016 and 2017). Total revenues reached $605.7 million in 2023, with EPS growing at an annual rate of 20.8% over the same period.
Looking ahead, the company anticipates continued organic growth driven by its existing portfolio pipeline and properties. Notably, four properties in Royal Gold’s portfolio are set to commence or have already begun gold production in 2024.
Analysts forecast robust revenue growth of 36.4% annually over the next two years, along with total EPS growth of 35.5% from 2023 to 2025. Royal Gold is expected to maintain 11% annualized growth in revenues and earnings per share over the next five years.
The company boasts strong pre-tax profit margins, reaching 46.4% in fiscal 2023 and consistently outperforming industry averages. Moreover, Royal Gold has demonstrated a commitment to shareholders through its dividend growth, achieving a 16% compounded annual growth rate since 2000. It is the sole precious metal company included in the S&P High Yield Dividend Aristocrats Index.
Considering its historical share price valuations, Royal Gold has the potential to support a high P/E ratio of 37.8, with a 52-week high of 40.6. Based on expected growth rates, a future high price of $231 is projected, while a low price of $85 could result if the P/E ratio were to decline to 23.2. The upside/downside ratio from current prices stands at 4.7-to-1.
Various valuation metrics, including Price/Net Asset Value and Price/Cash Flow, indicate that Royal Gold is trading near or below a reasonable valuation, offering a promising upside from the current price. When factoring in its modest yet growing dividend, the target total return is estimated at 16.9% annually through 2028.
