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What's in the Offing for Franco-Nevada's (FNV) Q4 Earnings?

Zacks Equity Research

Franco-Nevada Corporation FNV is set to release fourth-quarter 2018 results after the closing bell on Mar 19.

In the last reported quarter, the company delivered net earnings of $54.6 million or 29 cents per share compared to $55.3 million or 30 cents in the prior-year quarter. However, earnings outpaced the Zacks Consensus Estimate of 26 cents.

The company’s revenues came in at $171 million in the third quarter, down 0.5% year over year. The figure beat the Zacks Consensus Estimate of $164 million.

Franco-Nevada surpassed the Zacks Consensus Estimate in two of the trailing four quarters, average positive surprise being 5.50%.

Can the company surprise investors again or is it heading for a possible pullback? Let’s see how things are shaping up for this announcement.

Factors at Play

Performance of the company's Oil & Gas assets remained robust in the first three quarters of 2018, with revenues doubling to $68 million from $33 million in the prior-year period. This can be attributed to the stronger oil prices and increased production from the newly-added U.S. assets. Drill activity is higher and drilling productivity has been better than expected.  This will likely aid results in the to-be-reported quarter as well. Franco-Nevada, thus, anticipates revenues between $85 million and $88 million from its Oil & Gas assets for 2018, up from the previous guidance of $75-$85 million.

However, Franco-Nevada’s GEO production will be affected in the Oct-Dec quarter due to the processing of lower-grade materials at its Candelaria mine. The company, thus, expects to achieve gold production for 2018 within its previously-provided guided range, with GEOs expected to total between 445,000 and 450,000.

The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $162 million, depicting a year-over-year decline of 3%. Also, the Zacks Consensus Estimate for earnings at 26 cents per share reflects a year-over-year drop of 7%.

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Franco-Nevada Corporation Price and EPS Surprise

Franco-Nevada Corporation Price and EPS Surprise | Franco-Nevada Corporation Quote

 

Earnings Whispers

Our proven model does not conclusively show a beat for Franco-Nevada this earnings season as it does not possess the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below:

Earnings ESP: Earnings ESP for Franco-Nevada is 0.00%. The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 26 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Franco-Nevada currently carries a Zacks Rank #3.

It should be noted that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a few companies that you may want to consider, as our model shows these have the right combination of elements to post an earnings beat this quarter:

Atento S.A. ATTO has an Earnings ESP of +3.23% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Accenture plc ACN has an Earnings ESP of +1.91% and holds a Zacks Rank #3.

Carnival Corporation CCL has an Earnings ESP of +2.61% and carries a Zacks Rank #3.

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