What Do Royal Gold’s Newly Added Risk Factors Tell Investors?

Denver-headquartered Royal Gold (RGLD) is a precious metals stream and royalty company. It recently acquired royalty on Red Chris Mine in Canada and NX Gold Mine in Brazil. The company has interests in 187 properties around the world, including 17 projects in the development stage and 41 operating mines.

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Let’s take a look at the company’s latest financial performance and risk factors.

Royal Gold’s Fiscal Q4 Financial Results

The company reported revenue of $168.03 million for its Fiscal 2021 Q4 ended June 30. Revenue increased from $119.97 million in the same quarter last year and exceeded consensus estimates of $153.87 million. Adjusted EPS came to $1.04 compared to $0.53 a year ago and beat consensus estimates of $0.88.

For Fiscal 2021, revenue rose to $615.9 million from $498.8 million in the previous year. Adjusted EPS increased to $3.59 from $2.47 last year. (See Royal Gold stock charts on TipRanks).

Royal Gold’s Risk Factors

The new TipRanks Risk Factors tool shows 26 risk factors for Royal Gold. The company introduced two new risk factors in its Fiscal 2021 full-year annual report.

A newly added Legal and Regulatory risk factor tells investors that Royal Gold is subject to tax in the U.S. and other countries where it operates. The company notes that current economic conditions could cause tax laws to change significantly. Royal Gold cautions that its operating results and cash flow could be negatively impacted by such changes.

In a newly added risk factor under the Production category, Royal Gold cautions that it may not achieve the benefits of the investments made in certain properties. It notes that the returns from those investments depend on the decisions of the operators of the properties. For example, if the operators cannot replace the mineral reserves that are depleted during mining, Royal Gold’s expected returns on investments could be adversely impacted.

Finance and Corporate is Royal Gold’s main risk category, accounting for 46% of the total risks. That is above the sector average at 38%. Royal Gold’s shares have gained about 5% since the beginning of 2021.

Analysts’ Take

RBC Capital analyst Josh Wolfson recently reiterated a Buy rating on Royal Gold stock with a price target of $140. Wolfson’s price target suggests 25.75% upside potential.

Consensus among analysts is a Moderate Buy based on 2 Buys and 3 Holds. The average Royal Gold price target of $134.57 implies 20.87% upside potential to current levels.