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Freehold Royalties (TSE:FRU)
TSX:FRU
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Freehold Royalties
(TSX:FRU)
67Neutral
Positive Factors
Dividend Stability
FRU is capable of continuing to offer investors a stable and growing dividend as it executes on its U.S. expansion strategy.
Expansion and Acquisition
Expanding Midland footprint in $259M royalty acquisition increases FRU's U.S. inventory by more than 20%.
Financial Performance
The assets are expected to generate significant net royalty revenue, contributing to FRU's strong financial position.
Negative Factors
Commodity Prices
FRU's strategy is being executed against a backdrop of weaker commodity prices.
Inventory Valuation
Investors are currently paying for about one-third of the undrilled upside, indicating potential undervaluation of inventory.
Freehold Royalties (FRU) vs. S&P 500 (SPY)
Market Cap
$1.83B
Dividend Yield9.63%
Average Volume (3M)736.44K
Price to Earnings (P/E)11.3
Beta (1Y)0.95
Revenue Growth-1.62%
EPS Growth12.60%
CountryCA
Employees105
SectorEnergy
Sector Strength44
IndustryOil & Gas Exploration & Production
Share Statistics
EPS (TTM)0.98
Shares Outstanding163,960,330
10 Day Avg. Volume954,384
30 Day Avg. Volume736,440
Financial Highlights & Ratios
PEG Ratio0.90
Price to Book (P/B)N/A
Price to Sales (P/S)6.25
Price to Cash Flow (P/CF)8.20
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$15.74Price Target Upside40.80% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
Freehold Royalties Business Overview & Revenue Model
Company DescriptionFreehold Royalties Ltd., an oil and gas royalty company, owns working interests in oil, natural gas, natural gas liquids, and potash properties in Western Canada and the United States. The company holds approximately 6.2 million gross acres of land in Canada and 0.8 million gross drilling unit acres in the United States. It has royalty interests in approximately 15,000 producing wells and receives royalty from approximately 350 industry operators in North America. The company was founded in 1996 and is headquartered in Calgary, Canada.
How the Company Makes MoneyFreehold Royalties makes money primarily through the collection of royalty payments from oil and gas production on its lands. As a royalty holder, the company earns a percentage of the revenue generated from the extraction of oil and gas resources by operators who lease the rights to produce on its properties. This revenue model provides Freehold with a stable and predictable income stream, as it is not directly exposed to the operational costs and risks associated with drilling and production. The company’s earnings are influenced by commodity prices, production volumes, and lease agreements. Additionally, Freehold Royalties strategically acquires additional royalty interests to enhance its portfolio, further contributing to its revenue growth.
Freehold Royalties Financial Statement Overview
Summary
Freehold Royalties showcases strong profitability and a solid balance sheet with manageable leverage. However, the recent revenue decline and negative free cash flow in 2024 highlight areas of concern that need close monitoring to maintain financial resilience.Income Statement
Freehold Royalties has demonstrated strong revenue and profit growth over the years. The gross profit margin for 2024 is approximately 64.33%, which is a robust figure indicating efficient cost management. However, the company saw a decline in total revenue from 2023 to 2024 by approximately 1.62%, which may warrant attention. Net profit margin for 2024 is high at 48.29%, showcasing strong profitability. Both EBIT and EBITDA margins are unavailable for 2024, but previous years show consistent profitability.75
Positive
Balance Sheet
The company maintains a healthy balance sheet with a debt-to-equity ratio of around 0.28 for 2024, indicating a conservative use of leverage. Return on equity (ROE) for 2024 is approximately 13.60%, reflecting efficient use of equity capital. The equity ratio stands at 74.16%, suggesting a strong equity base relative to total assets.80
Positive
Cash Flow
Freehold Royalties experienced a significant decline in free cash flow in 2024, resulting in a negative figure, which could indicate potential cash management challenges. The operating cash flow to net income ratio for 2024 is approximately 1.49, showing strong cash generation relative to net income. However, the free cash flow to net income ratio is negative, highlighting the need for careful cash flow management.65
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 309.48M | 314.57M | 393.02M | 206.19M | 89.96M | Gross Profit |
| 199.06M | 305.08M | 281.72M | 118.17M | 10.56M | EBIT |
| 0.00 | 286.00M | 257.57M | 98.53M | -4.42M | EBITDA |
| 308.18M | 279.34M | 377.76M | 186.67M | 65.58M | Net Income Common Stockholders |
| 149.45M | 131.90M | 209.19M | 72.08M | -13.93M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 0.00 | 0.00 | 524.00K | 2.19M | 1.03M | Total Assets |
| 1.48B | 1.12B | 1.21B | 1.07B | 829.91M | Total Debt |
| 302.31M | 124.59M | 158.28M | 147.81M | 94.91M | Net Debt |
| 302.31M | 124.59M | 157.75M | 145.63M | 93.89M | Total Liabilities |
| 383.02M | 194.66M | 251.66M | 179.54M | 170.47M | Stockholders Equity |
| 1.10B | 923.76M | 960.34M | 890.97M | 659.44M |
| Cash Flow | Free Cash Flow | |||
| -188.38M | 206.27M | 136.55M | -214.98M | 62.13M | Operating Cash Flow |
| 223.33M | 216.92M | 327.35M | 162.02M | 65.77M | Investing Cash Flow |
| -400.37M | -21.18M | -191.18M | -376.61M | -9.55M | Financing Cash Flow |
| 177.03M | -196.24M | -138.08M | 215.78M | -56.36M |
Freehold Royalties Technical Analysis
Negative
11.18
Price Trends
12.35
Negative
12.63
Negative
12.90
Negative
Market Momentum
0.10
Negative
56.65
Neutral
30.88
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:FRU, the sentiment is Negative. The current price of 11.18 is below the 20-day moving average (MA) of 12.27, below the 50-day MA of 12.35, and below the 200-day MA of 12.90, indicating a bearish trend. The MACD of 0.10 indicates Negative momentum. The RSI at 56.65 is Neutral, neither overbought nor oversold. The STOCH value of 30.88 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:FRU.
Freehold Royalties Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Performance Comparison
TSE:FRU
Freehold Royalties
11.18
-2.05
-15.49%
VET
Vermilion Energy
6.09
-5.46
-47.27%
SPGYF
Whitecap Resources
5.55
-1.50
-21.28%
PREKF
PrairieSky Royalty
16.41
-3.04
-15.63%
BNEFF
Bonterra Energy
2.05
-2.60
-55.91%
TSE:TPZ
Topaz Energy Corp
22.63
1.26
5.90%
Freehold Royalties Earnings Call Summary
Earnings Call Date: Mar 12, 2025 | % Change Since: -9.28% | Next Earnings Date: May 13, 2025
Earnings Call Sentiment Positive
The earnings call for Q3 2024 highlighted significant growth and strong financial performance, particularly in liquids production and U.S. operations. Despite challenges from weak gas prices affecting production, the overall financial health and strategic positioning in the oil market underscore a positive outlook.Highlights
Strong Liquids Production Growth
Liquids production in Q3 was 9,367 barrels a day, up 3% from Q3 2023 and up 4% year-to-date compared to 2023.
Impressive Realized Pricing
Realized price of $54.36 per BOE was 10% and 78% higher than Canadian royalty peers.
Robust U.S. Production
U.S. production remained near record levels at 5,533 BOE a day in the quarter with significant drilling activity.
Strong Financial Performance
Funds from operations were $56 million with a 73% payout ratio and reduced net debt by $12 million to $187 million.
Increased Drilling Activity
A total of 278 wells drilled across the North American portfolio, an increase of 11% compared to Q3 last year.
Lowlights
Impact of Weak Gas Prices
Gas volumes in Canada were down 270 BOE a day from the prior quarter due to weak AECO pricing.
Deferred Drilling Activity
Operators pushed drilling programs into Q4 2024 and Q1 2025 to capture expected better gas pricing.
Company Guidance
In the third quarter of 2024, Freehold Royalties demonstrated robust financial and operational performance, as detailed in their earnings call. The company highlighted a dividend yield of just under 8% and a payout ratio of 73%, supported by strong cash flows and a diversified oil-focused portfolio. Liquids production increased by 3% from Q3 2023, reaching 9,367 barrels per day, with a realized price of $54.36 per BOE, significantly surpassing Canadian royalty peers by 10% and 78%, respectively. Despite a minor drop in Canadian production to 9,075 BOE per day due to weak AECO gas prices, the impact on cash flow was minimal. The U.S. operations maintained near-record production levels at 5,533 BOE per day, with active drilling facilitated by 33 rigs. Freehold's strategic acquisition focus in the Permian and Eagle Ford basins contributed to a 278-well drilling count, a notable 11% increase from the previous year. Financially, the company generated $56 million in funds from operations, reduced net debt by $12 million to $187 million, and remains well below its debt target range, ensuring a solid foundation for future growth and shareholder returns.Freehold Royalties Corporate Events
M&A TransactionsBusiness Operations and StrategyFinancial Disclosures
Freehold Royalties Reports Strong 2024 Results and Strategic Growth
Positive
Mar 12, 2025
Freehold Royalties Ltd. reported strong financial and operational results for 2024, with significant revenue and funds from operations. The company achieved a notable increase in production and reserves, driven by organic growth and strategic acquisitions, including a major acquisition in the Midland Basin. These results underscore Freehold’s robust industry positioning and potential for future growth, benefiting stakeholders through increased dividends and enhanced asset value.
Dividends
Freehold Royalties Announces February 2025 Dividend
Positive
Feb 13, 2025
Freehold Royalties has announced a dividend of Cdn. $0.09 per common share, payable on March 17, 2025, to shareholders of record as of February 28, 2025. This declaration continues to position Freehold as a significant player in the energy royalty sector, providing shareholders with regular income and reinforcing its stable financial outlook.
Freehold Royalties Announces Dividend for January 2025
Jan 15, 2025
Freehold Royalties Ltd. has announced a dividend of Cdn. $0.09 per common share, payable on February 18, 2025, to shareholders recorded by January 31, 2025. This declaration underscores Freehold’s commitment to providing returns to its investors and highlights its strong position in the energy sector.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.