Franco-Nevada (TSX:FNV): Revisiting Valuation as Royalty Strategy Gains Attention and Share Price Outpaces Recent Averages

Franco-Nevada (TSX:FNV) is back on investors radar as its royalty focused model draws fresh attention amid shifting sentiment in precious metals and a recent move in the stock above familiar trading averages.

See our latest analysis for Franco-Nevada.

Despite a softer 7 day share price return, Franco-Nevada’s latest share price of $283.25 reflects a healthy 30 day share price return of 6.72 percent and a standout 1 year total shareholder return of 67.45 percent. This suggests momentum in the royalty story rather than a fading spike.

If Franco-Nevada’s run has you thinking about what else could surprise to the upside, this is a good moment to explore fast growing stocks with high insider ownership for other potential outperformers.

But with earnings still growing, a premium valuation, and the share price now well above analyst targets, investors face a key question: is Franco-Nevada still a buy, or is the market already pricing in future growth?

Most Popular Narrative Narrative: 18% Undervalued

With Franco-Nevada last closing at CA$283.25 against a narrative fair value of about CA$343, the story leans toward meaningful upside from here.

Recent and ongoing acquisitions of high quality, long life assets (e.g., Cote Gold, Arthur/AngloGold's Nevada projects, Yanacocha, Western Limb) have substantially diversified the portfolio, decreasing operational risk and underpinning a stronger, more stable growth trajectory for revenues and cash flow.

Read the complete narrative.

Curious how robust double digit growth, resilient margins, and a premium future earnings multiple can still line up as reasonable assumptions? The full narrative unpacks the cash flow math, the timeline for new projects to ramp, and the discount rate that turns these forecasts into that higher fair value estimate.

Result: Fair Value of $343.38 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, investors should keep an eye on prolonged gold price weakness and setbacks at major assets like Candelaria or Cobre Panama, which could quickly derail that upside case.

Find out about the key risks to this Franco-Nevada narrative.

Another Lens On Valuation

On earnings, Franco-Nevada looks stretched. Its P/E of 42.5 times towers over both the Canadian metals and mining average of 21.2 times and a fair ratio of 22.9 times, as well as the peer average of 28.8 times. That premium may reward growth, or simply raise downside risk if sentiment cools.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Franco-Nevada Narrative

If you see things differently or want to dig into the numbers yourself, you can craft a personalized Franco-Nevada outlook in just minutes: Do it your way.

A great starting point for your Franco-Nevada research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

Ready for your next investing move?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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