Royal Gold (RGLD): Valuation in Focus After $1 Billion Streaming Deal With First Quantum

Royal Gold (RGLD) is making headlines after entering a $1 billion gold streaming agreement with First Quantum. Unlike traditional financing, this non-debt deal stands out because of its scale and potential impact on Royal Gold’s future growth.

See our latest analysis for Royal Gold.

Buzz around Royal Gold has picked up this year, especially after news of its gold streaming agreement with First Quantum. Even with a recent pullback—the share price has dropped 10.9% over the past month—Royal Gold’s momentum is hard to ignore with a year-to-date share price return of 31.4%. Looking further back, its three-year total shareholder return sits at an impressive 99.1%, reflecting resilient long-term growth despite a few bumps along the way.

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With Royal Gold trading around 20% below analyst price targets and outperforming peers this year, investors face a key question: Is the stock undervalued with room to run, or is all the future growth already priced in?

Most Popular Narrative: 25.9% Undervalued

Royal Gold’s most widely followed valuation narrative places its fair value at $238.63, which is substantially higher than the last close of $176.82. This wide gap spotlights a bullish debate around assumptions for growth and profitability, and hints at a potential disconnect between analyst expectations and current market sentiment.

The strategic acquisitions of Sandstorm Gold and Horizon Copper will significantly diversify Royal Gold's asset base. This reduces single-asset risk and increases exposure to long-term growth projects, which should drive more stable and growing revenue streams and improve net margins. Recent investments in projects like the Kansanshi gold stream (with a multi-decade production profile) and the Warintza copper-gold-moly project (large-scale development potential in the early 2030s) position Royal Gold to benefit from increasing demand for gold (as a hedge against inflation and geopolitical risk) and copper (driven by electrification and renewable energy adoption), supporting higher long-term revenue and earnings growth.

Read the complete narrative.

Curious why analysts are so confident in Royal Gold’s future? There is a hidden formula powering this lofty fair value: a blend of bold growth projections and major profit margin shifts. Want the full story on what’s really driving this gap? Read the narrative for the inside numbers and surprising logic behind this valuation.

Result: Fair Value of $238.63 (UNDERVALUED)

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

However, ongoing reliance on gold prices and potential operational issues at key mines could quickly challenge even the most optimistic forecasts.

Find out about the key risks to this Royal Gold narrative.

Another View: Market Multiples Raise Caution

While the dominant narrative points to Royal Gold being undervalued, a closer look at its valuation ratios reveals a different story. The company's price-to-earnings ratio sits at 33.2x, which is well above the US Metals and Mining industry average of 28x, its peer average of 29.5x, and the fair ratio of 32.1x that the market could revert towards. This premium suggests the market is already pricing in a lot of growth, amplifying valuation risks if performance falls short. Could this disconnect signal opportunity, or has optimism gone too far?

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

Build Your Own Royal Gold Narrative

If you see things differently or want to run your own numbers, it only takes a few minutes to craft a custom view of Royal Gold’s outlook. Do it your way

A great starting point for your Royal Gold research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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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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