Shares of precious metals streamer Royal Gold (NASDAQ: RGLD) rose 7% in August according to S&P Market Intelligence. Although the company's fourth-quarter net income of $0.31 per share missed analysts' consensus estimate of $0.33 per share, investors were unfazed, focusing instead on the bright spots in the report. The royalty and streaming company, whose fiscal year ended June 30, also earned a gold star from investors for its 2017 performance.
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To say that Royal Gold's quarterly and full-year performances were strong would be quite the understatement. For one, the company reported a 16%-year-over-year increase in revenue, which it credited to to higher royalty volume principally from Penasquito, increased silver sales from Pueblo Viejo and greater gold sales from Wassa and Prestea. This, in turn, contributed to record revenue of $441 million for fiscal 2017, an annual increase of 23%.
The top-line improvement was considerable, but it paled in comparison to the result at the bottom of the income statement. Royal Gold reported adjusted net income of $102 million for fiscal 2017, a 56% increase from last year.
Oftentimes, savvy investors are skeptical of earnings figures since management can manipulate non-cash charges and produce skewed results. Instead, they place greater emphasis on cash flow. However, for Royal Gold, that statistic was equally lustrous: It reported record operating cash flow of $266 million for fiscal 2017, representing a 57% increase. And, according to Morningstar, Royal Gold booked $62 million in free cash flow -- a welcome improvement over the negative $1.2 billion that it reported in fiscal 2016.
As if all that weren't enough reason to rejoice, Royal Gold further rewarded shareholders by returning a record $61 million in dividends -- a 5% increase compared to fiscal 2016.
The various company records should certainly be lauded, but investors should be even more pleased by the fact that it reported an average gold sale price of $1,259 for fiscal 2017 -- up just 8%. This suggests that the company's stellar performance was not just a function of higher gold prices but improvements in the company's operations.
Looking ahead, the company -- with several catalysts on the horizon -- may experience even greater growth. Gold production will commence at Rainy River this month, and Royal Gold expects production will get underway at the Cortez Crossroads mine and the Pyrite Leach project at Penasquito in calendar years 2018 and 2019, respectively.
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