Royal Gold (NASDAQ:RGLD) & Franco-Nevada (NYSE:FNV) Critical Comparison

Franco-Nevada (NYSE:FNV) and Royal Gold (NASDAQ:RGLD) are both large-cap basic materials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, analyst recommendations, valuation, institutional ownership, dividends and profitability.

Dividends

Franco-Nevada pays an annual dividend of $1.52 per share and has a dividend yield of 0.7%. Royal Gold pays an annual dividend of $1.80 per share and has a dividend yield of 0.8%. Franco-Nevada pays out 31.9% of its earnings in the form of a dividend. Royal Gold pays out 24.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Franco-Nevada has raised its dividend for 2 consecutive years and Royal Gold has raised its dividend for 25 consecutive years. Royal Gold is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Franco-Nevada and Royal Gold’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Franco-Nevada	59.48%	13.94%	13.12%
Royal Gold	55.99%	14.14%	12.42%

Analyst Ratings

This is a breakdown of recent recommendations for Franco-Nevada and Royal Gold, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Franco-Nevada	0	6	7	1	2.64
Royal Gold	1	2	8	0	2.64

Franco-Nevada presently has a consensus price target of $232.75, suggesting a potential upside of 12.15%. Royal Gold has a consensus price target of $234.60, suggesting a potential upside of 4.12%. Given Franco-Nevada’s stronger consensus rating and higher possible upside, equities analysts plainly believe Franco-Nevada is more favorable than Royal Gold.

Insider and Institutional Ownership

77.1% of Franco-Nevada shares are held by institutional investors. Comparatively, 83.7% of Royal Gold shares are held by institutional investors. 0.7% of Franco-Nevada shares are held by company insiders. Comparatively, 0.5% of Royal Gold shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Risk and Volatility

Franco-Nevada has a beta of 0.45, suggesting that its stock price is 55% less volatile than the S&P 500. Comparatively, Royal Gold has a beta of 0.48, suggesting that its stock price is 52% less volatile than the S&P 500.

Valuation and Earnings

This table compares Franco-Nevada and Royal Gold”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Franco-Nevada	$1.11 billion	35.93	$552.10 million	$4.77	43.51
Royal Gold	$719.40 million	26.43	$332.02 million	$7.28	30.95

Franco-Nevada has higher revenue and earnings than Royal Gold. Royal Gold is trading at a lower price-to-earnings ratio than Franco-Nevada, indicating that it is currently the more affordable of the two stocks.

Summary

Franco-Nevada beats Royal Gold on 10 of the 18 factors compared between the two stocks.

About Franco-Nevada

Franco-Nevada Corporation operates as a gold-focused royalty and streaming company in South America, Central America, Mexico, the United States, Canada, and internationally. It operates through Mining and Energy segments. The company manages its portfolio with a focus on precious metals, such as gold, silver, and platinum group metals; and engages in the sale of crude oil, natural gas, and natural gas liquids through a third-party marketing agent. Franco-Nevada Corporation was founded in 1986 and is headquartered in Toronto, Canada.

About Royal Gold

Royal Gold, Inc., together with its subsidiaries, acquires and manages precious metal streams, royalties, and related interests. The company engages in acquiring stream and royalty interests or to finance projects that are in production, development, or in the exploration stage in exchange for stream or royalty interests, which primarily consists of gold, silver, copper, nickel, zinc, lead, and other metals. Its stream and royalty interests on properties are located in the United States, Canada, Chile, the Dominican Republic, Australia, Africa, Mexico, Botswana, and internationally. Royal Gold, Inc. was incorporated in 1981 and is headquartered in Denver, Colorado.