Gold-Focused Franco-Nevada Stock Breaches Buy Point After Earnings Growth Acceleration

Blockhead
Aug 15

Gold-focused Franco-Nevada (FNV) is this week's Big Cap 20 stock to watch as it punches above a cup buy point. Shares of the Toronto-based company are up more than 47% year to date, easily beating the S&P 500, which is up close to 10% in 2025.

Franco-Nevada is a gold-focused royalty and streaming company, which means it doesn't get its hands dirty in the mining process directly. It provides upfront capital to miners in exchange for either a percentage of future sales as royalty or a stream of precious metals at discounted prices.

Franco-Nevada just reported second-quarter earnings on Aug. 11. The company posted yet another quarter of accelerating year-over-year earnings and sales growth. Franco has posted per-share earnings growth of 6%, 51% and 65% in the three most recent quarters. Meanwhile, sales have increased by 6%, 43%, and 42% in the last three quarters.

In the most recent quarter, the royalty giant posted earnings per share of $1.28 — reaching an all-time high and beating analyst expectations. Revenue surged to a record $369.4 million.

This period of growth arrived after several quarters of year-over-year declines. Franco's recent run of strong earnings has won the stock a hardy 93 Earnings Per Share Rating.

Acquisitions, Higher Gold Prices Drive Growth

In the most recent quarter, the company cited higher gold prices and strategic acquisitions as reasons for the growth, as well as strong royalties on key gold projects in Canada and Nevada. Franco anticipates continued growth from its recent acquisitions and potential developments at Cobre Panama.

During the quarter, Franco-Nevada acquired a royalty on IAMGOLD's Cote Gold Mine in Canada. The acquisition is expected to drive growth in the second half of the year.

"I am very pleased with our record financial results this quarter," Franco-Nevada Chief Executive Paul Brink said about the company's second-quarter performance. "Our portfolio largely produced as expected, and higher gold prices contributed to record revenue, operating cash flow, Adjusted EBITDA margins, and earnings."

Franco-Nevada Stock Breaks Out

Franco-Nevada stock ranks 14th in the gold, silver and gems mining group, according to IBD Stock Checkup, based on Composite Rating. A rating of 99 is the highest possible. The fact that it ranks No. 14 means at least 13 other stocks in the group also have top-level Composite Ratings, a bullish sign for the group.

IBD's MarketSurge charting tool shows that the group holds 9th place among IBD's 197 industry groups.

The current buy point of 179.99 is off a cup base that's been forming since June. This neighboring base is right next to a prior cup base that the stock struggled to break out from. The current cup is also a stage one base after undercutting the prior base's low. Earlier stage bases are more prone to succeed. The buy zone goes to 188.98.

Shares briefly moved above the buy point early Thursday but have since pared gains. One thing to note is the stock's relative strength line is lagging, which is not ideal. When a stock is breaking out, we like to see its RS line hitting new highs.

Meanwhile, the Accumulation/Distribution Rating of B+ also shows strong interest from funds in the last 13 weeks.

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