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Is There Now An Opportunity In Franco-Nevada Corporation (TSX:FNV)?

Let's talk about the popular Franco-Nevada Corporation (TSX:FNV). The company's shares saw a decent share price growth in the teens level on the TSX over the last few months. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s examine FNV’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. See our latest analysis for FNV

What's the opportunity in FNV?

FNV is currently overpriced based on my relative valuation model. In this instance, I’ve used the price-to-equity (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that FNV’s ratio of 106.6x is above its peer average of 39.8x, which suggests the stock is overvalued compared to the materials industry. But, is there another opportunity to buy low in the future? Since FNV’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much FNV moves relative to the rest of the market.

What kind of growth will FNV generate?

TSX:FNV Future Profit Sep 9th 17
TSX:FNV Future Profit Sep 9th 17

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares.Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 72.72% over the next couple of years, the future seems bright for FNV. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in FNV’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe FNV should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

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Are you a potential investor? If you’ve been keeping an eye on FNV for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for FNV, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Franco-Nevada. You can find everything you need to know about FNV in the latest infographic research report. If you are no longer interested in Franco-Nevada, you can use our free platform to see my list of over 50 other stocks with a high growth potential.


To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.