TSX:FRU

Stock Analysis Report

Freehold Royalties

Executive Summary

Freehold Royalties Ltd., an oil and gas royalty company, owns working interests in oil, natural gas, and potash properties in Western Canada.

Snowflake

Fundamentals

Excellent balance sheet with moderate growth potential.

Share Price & News

How has Freehold Royalties's share price performed over time and what events caused price changes?


Latest Share Price and Events


Market Performance


7 Day Return

-0.4%

FRU

1.2%

CA Oil and Gas

0.3%

CA Market


1 Year Return

-34.4%

FRU

-13.3%

CA Oil and Gas

0.1%

CA Market

Return vs Industry: FRU underperformed the Canadian Oil and Gas industry which returned -13.3% over the past year.

Return vs Market: FRU underperformed the Canadian Market which returned 0.1% over the past year.


Shareholder returns

FRUIndustryMarket
7 Day-0.4%1.2%0.3%
30 Day-15.4%-4.7%-2.5%
90 Day-14.3%-4.0%-1.4%
1 Year-29.3%-34.4%-9.3%-13.3%3.6%0.1%
3 Year-38.1%-47.4%-15.8%-24.3%14.3%4.1%
5 Year-57.1%-68.0%-22.2%-34.0%25.0%6.9%

Price Volatility Vs. Market

How volatile is Freehold Royalties's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Freehold Royalties undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Undervalued: FRU (CA$6.91) is trading below our estimate of fair value (CA$19.38)

Significantly Undervalued: FRU is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: FRU is poor value based on its PE Ratio (1425.3x) compared to the Oil and Gas industry average (8.3x).

PE vs Market: FRU is poor value based on its PE Ratio (1425.3x) compared to the Canadian market (13.7x).


Price to Earnings Growth Ratio

Low PEG Ratio: FRU is poor value based on its PEG Ratio (8.2x)


Price to Book Ratio

PB vs Industry: FRU is overvalued based on its PB Ratio (1.1x) compared to the CA Oil and Gas industry average (0.6x).


Next Steps

Future Growth

How is Freehold Royalties forecast to perform in the next 1 to 3 years based on estimates from 4 analysts?

173.4%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: FRU's forecast earnings growth (173.4% per year) is above the savings rate (1.9%).

Earnings vs Market: FRU's earnings (173.4% per year) are forecast to grow faster than the Canadian market (13.2% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: FRU's revenue (0.5% per year) is forecast to grow slower than the Canadian market (5.7% per year).

High Growth Revenue: FRU's revenue (0.5% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

High Future ROE: FRU's Return on Equity is forecast to be low in 3 years time (4.5%).


Next Steps

Past Performance

How has Freehold Royalties performed over the past 5 years?

-41.5%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Earnings Trend: FRU's earnings have declined by -41.5% per year over the past 5 years.

Accelerating Growth: FRU's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: FRU had negative earnings growth (-69.1%) over the past year, making it difficult to compare to the Oil and Gas industry average (62.2%).


Return on Equity

High ROE: FRU's Return on Equity (0.08%) is considered low.


Return on Assets

ROA vs Industry: FRU's Return on Assets is below or equal to the Oil and Gas industry average last year.


Return on Capital Employed

ROCE Improving: FRU's Return on Capital Employed has declined over the past 3 years.


Next Steps

Financial Health

How is Freehold Royalties's financial position?


Financial Position Analysis

Short Term Liabilities: FRU's short term assets (CA$24.4M) exceeds its short term liabilities (CA$11.7M)

Long Term Liabilities: FRU's short term assets (24.4M) do not cover its long term liabilities (121.7M)


Debt to Equity History and Analysis

Debt Level: FRU's debt to equity ratio (15.1%) is considered satisfactory

Reducing Debt: FRU's debt to equity ratio has reduced from 58.4% to 15.1% over the past 5 years.

Debt Coverage: FRU's debt is well covered by operating cash flow (104.6%).

Interest Coverage: FRU's interest payments on its debt are well covered by EBIT (5.4x coverage).


Balance Sheet

Inventory Level: FRU has a high level of physical assets or inventory.

Debt Coverage by Assets: FRU's debt is not covered by short term assets (assets are 0.2x debt).


Next Steps

Dividend

What is Freehold Royalties's current dividend yield, its reliability and sustainability?

9.12%

Current Dividend Yield


Dividend Yield vs Market

company9.1%marketbottom25%2.0%markettop25%6.0%industryaverage4.9%forecastin3Years9.1%

Current dividend yield vs market & industry


Stability and Growth of Payments

Notable Dividend: FRU's dividend (9.12%) is higher than the bottom 25% of dividend payers in the Canadian market (2.02%).

High Dividend: FRU's dividend (9.12%) is in the top 25% of dividend payers in the Canadian market (5.99%)

Stable Dividend: FRU's dividends per share have been stable in the past 10 years.

Growing Dividend: FRU's dividend payments have fallen over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (12995%), FRU's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: FRU's dividends in 3 years are not forecast to be well covered by earnings (201.8% payout ratio).


Next Steps

Management

What is the CEO of Freehold Royalties's salary, the management and board of directors tenure and is there insider trading?

6.4yrs

Average management tenure


CEO

Tom Mullane (58yo)

6.4yrs

Tenure

CA$458,760

Compensation

Mr. Thomas J. Mullane, also known as Tom, has been Chief Executive Officer and President of Rife Resources Ltd., since May 17, 2013. Mr. Mullane has been the Chief Executive Officer and President at Freeho ...


CEO Compensation Analysis

Compensation vs. Market: Tom's total compensation ($USD347.45K) is about average for companies of similar size in the Canadian market ($USD1.55M).

Compensation vs Earnings: Tom's compensation has been consistent with company performance over the past year.


Management Age and Tenure

6.4yrs

Average Tenure

Experienced Management: FRU's management team is seasoned and experienced (6.4 years average tenure).


Board Age and Tenure

5.9yrs

Average Tenure

62.5yo

Average Age

Experienced Board: FRU's board of directors are considered experienced (5.9 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

BuyCA$29,99004 Jul 19
Robert Lamond
EntityIndividual
Shares3,666
Max PriceCA$8.18
BuyCA$29,24026 Mar 19
Michael Mogan
EntityIndividual
Role
Controller
Controller
Shares3,400
Max PriceCA$8.60
BuyCA$264,60007 Dec 18
Marvin Romanow
EntityIndividual
Role
Chairman of the Board
Chair of the Board
Shares30,000
Max PriceCA$8.82
BuyCA$64,50030 Nov 18
Thomas Mullane
EntityIndividual
Role
Chief Executive Officer
President
Shares7,500
Max PriceCA$8.60
BuyCA$43,35027 Nov 18
Peter Harrison
EntityIndividual
Role
Member of the Board of Directors
Non Independent Director
Shares5,000
Max PriceCA$8.67
BuyCA$29,33726 Nov 18
Robert Lamond
EntityIndividual
Shares3,300
Max PriceCA$8.89

Ownership Breakdown


Management Team

  • David Spyker

    Chief Operating Officer

    • Tenure: 0.6yrs
    • Compensation: CA$273.14k
  • Tom Mullane (58yo)

    President

    • Tenure: 6.4yrs
    • Compensation: CA$458.76k
  • Karen Taylor

    Corporate Secretary

    • Tenure: 11.7yrs
  • Alan Withey (49yo)

    Interim VP of Finance & CFO

    • Tenure: 0.6yrs
  • Michael Mogan

    Controller

    • Tenure: 11.2yrs
  • Matt Donohue

    Manager of Investor Relations & Capital Markets

    • Tenure: 0yrs

Board Members

  • Marvin Romanow (63yo)

    Chair of the Board

    • Tenure: 3.4yrs
    • Compensation: CA$180.00k
  • Art Korpach (62yo)

    Corporate Director

    • Tenure: 7.4yrs
    • Compensation: CA$145.00k
  • Gary Bugeaud (57yo)

    Corporate Director

    • Tenure: 4.4yrs
    • Compensation: CA$130.00k
  • Aidan Walsh (64yo)

    Independent Director

    • Tenure: 6.4yrs
    • Compensation: CA$137.50k
  • Peter Harrison (63yo)

    Non Independent Director

    • Tenure: 23.3yrs
    • Compensation: CA$55.00k
  • Tom Mullane (58yo)

    President

    • Tenure: 6.4yrs
    • Compensation: CA$458.76k
  • Sue MacKenzie (59yo)

    Corporate Director

    • Tenure: 5.4yrs
    • Compensation: CA$140.00k
  • J. Kay (65yo)

    Corporate Director

    • Tenure: 3.4yrs
    • Compensation: CA$130.00k

Company Information

Freehold Royalties Ltd.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Freehold Royalties Ltd.
  • Ticker: FRU
  • Exchange: TSX
  • Founded: 1996
  • Industry: Oil and Gas Exploration and Production
  • Sector: Energy
  • Market Cap: CA$818.923m
  • Shares outstanding: 118.51m
  • Website: https://www.freeholdroyalties.com

Location

  • Freehold Royalties Ltd.
  • 144 – 4th Avenue SW
  • Suite 400
  • Calgary
  • Alberta
  • T2P 3N4
  • Canada

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
FRUTSX (The Toronto Stock Exchange)YesCommon SharesCACADFeb 1997
FRHL.FOTCPK (Pink Sheets LLC)YesCommon SharesUSUSDFeb 1997
1FHDB (Deutsche Boerse AG)YesCommon SharesDEEURFeb 1997
0UWLLSE (London Stock Exchange)YesCommon SharesGBCADFeb 1997

Biography

Freehold Royalties Ltd., an oil and gas royalty company, owns working interests in oil, natural gas, and potash properties in Western Canada. It holds approximately 6.2 million gross acres of land from nor ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/10/16 00:06
End of Day Share Price2019/10/15 00:00
Earnings2019/06/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.