Performances of royalty and streaming companies
Among our precious metals categories, royalty and streaming companies have substantially underperformed other miners. As a group, they rose 50.0% in 2016, which is less than rises by senior, intermediate, or silver miners. The underperformance is mainly due to the lower beta these companies have over gold prices (GLD) (IAU).
Royal Gold (RGLD) is the top-performing royalty company with an annual rise of 70.4% in 2016. Next is Silver Wheaton (SLW) with a rise of 55.0%, followed closely by Sandstorm Gold (SAND) with a rise of 51.0%. Franco-Nevada (FNV) has underperformed with a rise of just 27.6%.
Ratings for royalty companies
Royalty and streaming companies are more stable since their cash flows are more predictable than cash flows for miners. This stability is probably why analysts don’t have many “sell” ratings on these stocks. Among the four companies we mentioned above, only Franco-Nevada has a “sell” rating.
Silver Wheaton seems to be analysts’ favorite stock in this space. It has 93.0% “buy” ratings and 7.0% “hold” ratings. Sandstorm Gold follows with 86.0% “buy” ratings.
Changes in ratings
Analysts’ ratings have changed the most for Franco-Nevada in the last year. While the company had 44.0% “buy” ratings in January 2016, it had only 13.0% “buy” ratings in January 2017.
All the streaming companies have upside potentials based on their target prices. Silver Wheaton has an upside potential of 32.0%, while Franco-Nevada could rise 6.0% based on analysts’ average target price.
In the next part of this series, we’ll take a look at recent key ratings changes for royalty and streaming companies.