/biz/ - Business & Finance

>>54252244
>Wheaton has a P/E of 32 and Franco 40. That seems high to me because what are the mine lives of their streams and royalties?
Varying. Some are long life assets, some aren't. But any decrease in royalty revenue is displaced by new mines coming online. Both companies have a steady growth pipeline as well as a history of steady revenue growth
>Also if gold price will do well it will be harder for these companies to do deals as miners will be flushed with cash.
They will benefit from increased revenues via their current royalties, and a higher gold price would incentivize mine expansions and new mines being developed. Franco Nevada has I think over 400 royalties and streams, most of which are exploration and development projects. Many of these royalty deals have been made during cyclical sector lows. New royalty acquisitions also keep being made even when the sector is booming, because developers are happy to trade away a royalty or a stream for a couple dozen million bucks of non-dilutative financing. Both WPM and FNV by the way have boatloads of cash and zero debt as well. I'd say royalty companies are fairly valued at 30x P/E for the aforementioned reasons.
>Don't know about Sandstorm, but I assume their royalties have shorter life span too.
I have to do more DD but they have over 200 royalties IIRC. And they have surprisingly many tier 1 assets in their portfolio thanks to recent acquisitions. Again, of course many of their royalties are short life assets but that's the beauty of royalty companies: new mines will come online to replace them. Sandstorm and Osisko Gold Royalties have impressive growth lining up in the next five years, and for no added cost. Remember: royalty companies' operating profit is their NET profit! I cannot recommend looking into royalty companies enough!
>But I feel like I should be able to buy the companies priced for current gold price.
I would love that too. Maybe a liquidity crisis this year could provide us that opportunity