Fact based stock research
Franco Nevada (TSX:FNV)

CA3518581051

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For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".

Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".

Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.

Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.

(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).

(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.

Franco Nevada stock research in summary

franco-nevada.com

ANALYSIS: With an Obermatt Combined Rank of 28 (worse than 72% compared with investment alternatives), Franco Nevada (Gold Production, Canada) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Franco Nevada are low in value (priced high) with a consolidated Value Rank of 8 (worse than 92% of alternatives) and show below-average growth (Growth Rank of 29) but are safely financed (Safety Rank of 98), which means low debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 28, is a hold recommendation based on Franco Nevada's financial characteristics. As the company Franco Nevada's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 8) and low growth (Obermatt Growth Rank of 29), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. In this case, good financing practices (Obermatt Safety Rank of 98) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more

Latest Obermatt Ranks


360° View^new
Sentiment Rank^new
Value Rank	8
Growth Rank	29
Safety Rank	98
Combined Rank	28

Country	Canada
Industry	Gold Production
Index	Human Rights, Gold, Iron, TSX Composite
Size class	Large

This stock has achievements: Top 10 Stock.

19-Dec-2024. Stock data may be delayed. Log in or sign up to get the most recent research.

Further information

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Review the performance ranks of the individual metrics that form each investment strategy.

Research History: Franco Nevada

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	4	8	8	8
GROWTH
GROWTH	64	71	1	29
SAFETY
SAFETY	85	78	98	98
SENTIMENT
SENTIMENT	n/a	29	21	^new
360° VIEW
360° VIEW	n/a	41	16	^new

Most recent update of the stock research: 19-Dec-2024. Financial reporting date used for calculating ranks: 30-Sep-2024. Stock research history is based on the Obermatt Method. The higher the rank, the better Franco Nevada is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	4	8	8	8
GROWTH
GROWTH	64	71	1	29
SAFETY
SAFETY	85	78	98	98
COMBINED
COMBINED	60	43	13	28

Last update of combined financial performance: 19-Dec-2024. Stock analysis on combined financial performance: The higher the rank of Franco Nevada the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 8 (worse than 92% compared with alternatives), Franco Nevada shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with all four indicators below average for Franco Nevada. Price-to-Sales is 5 which means that the stock price compared with what market professionals expect for future profits is higher than 95% of comparable companies, indicating a low value concerning Franco Nevada's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 10, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of Franco Nevada. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 17 and Dividend Yield, which is lower than 62% of comparable companies, also make the stock more expensive compared with investment alternatives. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 8, is a sell recommendation based on Franco Nevada's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for Franco Nevada? One reason may be that the company is simply too popular. If enough people want a particular stock, its price can exceed reasonable levels. This is often the case for companies offering new and exciting products and everybody wants a piece of the action. Should you pay a lot for a hot stock such as Franco Nevada? It's risky, and even if the stock price continues to grow because of popular demand, it may return to more typical lower levels later. And that return can be sudden and quick, making it impossible for retail investors to exit on time. Sometimes, high prices are deserved. This is the case when it is justified to believe that the company will dominate a market with high profit margins. It has happened in the past for many technology companies and indeed for commercially successful pharmaceutical discoveries. Sometimes they last, sometimes, they get eaten alive. Franco Nevada may be such a type of stock. That would mean, retail investors should be careful, only considering investing a small part of their wealth in this exciting category and always being ready to lose more than half, if not all of the investment. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision, which is essential in this case, as the financial indicators are inconclusive. ...read more

VALUE METRICS	2021	2022	2023	2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	7	7	5	5
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	19	15	24	17
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	12	12	13	10
DIVIDEND YIELD
DIVIDEND YIELD	30	25	37	38
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	4	8	8	8

Last update of Value Rank: 19-Dec-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of Franco Nevada; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 29 (better than 29% compared with alternatives), Franco Nevada shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Franco Nevada. Sales Growth has a rank of 69 which means that currently professionals expect the company to grow more than 69% of its competitors. Stock Returns are also above average with a rank of 53. But Capital Growth has only a rank of 19, which means that currently professionals expect the company to grow its invested capital less than 81% of its competitors. Profit Growth is also low, with a rank of only 23, which means that, currently, professionals expect the company to grow its profits below average. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 29, is a hold recommendation for growth and momentum investors. This is a surprising picture, as the messages from the operating growth indicators of revenues, profits, and invested capital are mixed, while stock returns are above average. It may indicate new intellectual properties, such as brand improvement or a strong market position that shows in revenues but not in the capital. The low profit-growth rate may indicate an early phase where costs are still high, and revenues don't fully cover upfront investments or fixed costs. The positive investor outlook with a 53% peer outperformance is reaffirmed in this case which may be a good sign for an investment into a well-protected high-growth company. This fact needs to be confirmed by researching the company website and press. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case, especially since the growth performance is mixed here. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	67	27	4	69
PROFIT GROWTH
PROFIT GROWTH	7	46	38	23
CAPITAL GROWTH
CAPITAL GROWTH	n/a	95	22	19
STOCK RETURNS
STOCK RETURNS	24	59	13	53
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	64	71	1	29

Last update of Growth Rank: 19-Dec-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of Franco Nevada.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 98 (better than 98% compared with alternatives) for 2024, the company Franco Nevada has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Franco Nevada is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, where all three are above average for Franco Nevada. Leverage is at 100, meaning the company has a below-average debt-to-equity ratio. It has less debt than 100% of its competitors. Refinancing is at a rank of 67, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 67% of its competitors. Finally, Liquidity is also good at a rank of 100, which means that the company generates more profit to service its debt than 100% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 98 (better than 98% compared with alternatives), Franco Nevada has a financing structure that is significantly safer than that of its competitors. These three positive financing indicators signal that the company is less likely to default on its debt obligations. However, it also means that its shareholder returns will be more modest if things go well. A low safety means fewer troubles in downtimes and less upside in good times. Investors may not have a debt issue with Franco Nevada but they should also compare Obermatt’s Value, Growth, and Sentiment Ranks before making a decision. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	62	100	100	100
REFINANCING
REFINANCING	68	25	57	67
LIQUIDITY
LIQUIDITY	91	98	98	100
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	85	78	98	98

Last update of Safety Rank: 19-Dec-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of Franco Nevada and the more cash is available to service its debt.

Sentiment Metrics in Detail

SENTIMENT	2021	2022	2023	2024
ANALYST OPINIONS
ANALYST OPINIONS	n/a	38	28	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	22	24	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	30	31	^new
MARKET PULSE
MARKET PULSE	n/a	78	70	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	29	21	^new

Last update of Sentiment Rank: 19-Dec-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for Franco Nevada.
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