Results: Franco-Nevada Corporation Exceeded Expectations And The Consensus Has Updated Its Estimates
The third-quarter results for Franco-Nevada Corporation (TSE:FNV) were released last week, making it a good time to revisit its performance. Revenues were US$549m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$2.05 were also better than expected, beating analyst predictions by 17%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Franco-Nevada after the latest results.
After the latest results, the ten analysts covering Franco-Nevada are now predicting revenues of US$2.75b in 2027. If met, this would reflect a decent 17% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to increase 8.0% to US$8.88. In the lead-up to this report, the analysts had been modelling revenues of US$2.65b and earnings per share (EPS) of US$8.51 in 2027. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
Check out our latest analysis for Franco-Nevada
Despite these upgrades,the analysts have not made any major changes to their price target of CA$404, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Franco-Nevada analyst has a price target of CA$481 per share, while the most pessimistic values it at CA$272. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Franco-Nevada's growth to accelerate, with the forecast 13% annualised growth to the end of 2027 ranking favourably alongside historical growth of 11% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 14% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Franco-Nevada is expected to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Franco-Nevada following these results. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Franco-Nevada going out to 2028, and you can see them free on our platform here..
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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