From Seekingalpha · The Bullionaire · · 1m
Royal Gold: Copper Shield or Cheap Royalty?
Royal Gold's copper shield is weak; its royalty model offers better value than peers.
In brief
Royal Gold's copper shield is weak; its royalty model offers better value than peers. Royal Gold is cheaper than peers at 1.67x risked asset value with debt cut to $150 million. Originally reported by Seekingalpha.
Gold Falls, Royal Gold Drops
Gold has fallen a fifth from its peak, Royal Gold has followed it down, and the P/E is still 25.
Copper Shield Test
Copper is 8% of revenue and barely moves my valuation, so the popular defence is weak.
Real Cushion
A low fixed cost per ounce, debt cut to $150 million, and first buybacks in company history.
Value Comparison
At 1.67x my risked asset value, Royal Gold is cheaper than Franco-Nevada, Elemental, and Wheaton.
Buy Rating
I rate RGLD a Buy with a $283 price target, 2.0x my risked value, and about 20% above the 19 October close.
The one thing
Royal Gold is cheaper than peers at 1.67x risked asset value with debt cut to $150 million.
