Franco-Nevada (FNV) Q2 2026: A 14-Cent Miss And A $42M Bullion Gain

Franco-Nevada Corporation (FNV) Q2 2026 — Q2 2026 (quarter ended June 30, 2026): adjusted EPS $1.81 vs a $1.95 bar, revenue $580.9M vs $616.7M expected. Yet revenue rose 57%, GEOs sold rose 18% to 132,405, and FY26 guidance moved to the UPPER half of 510,000-570,000 GEOs. An AMC print on Aug 11, so Aug 12 was the reaction: $235.94, down 1.99% on 1.4x volume. Every screener showed a 14-cent miss. Almost nobody opened the bullion note. Franco-Nevada takes some royalties in physical metal, holds it, and picks its own moment to sell - and that gain or loss sits inside Adjusted Net Income, because the company's definition strips impairments, disposals, fair-value moves and FX but NOT bullion trading. June 2025 booked a $42.2M gain on 44,484 ounces; June 2026 a $1.0M LOSS on 14,000. THE CALL: HOLD (3/5, A BETTER QUARTER THAN IT READ, AT A FULL PRICE) — base-case value ~$205.0 vs ~$235.94 today. KEY METRICS: - CALL: HOLD, 3/5. Blended fair value ~$205 vs the $235.94 Aug 12 close - about 13% BELOW the tape, and 27% under the Street's $280. A: owner-earnings DCF on ~$1.90B of 2026 free cash flow, +8% fading to 2%, discounted at 8.0% = $200. B: normalise gold to $3,900/oz (still 19% above last June's $3,279 average), $6.65 of earnings at 31x = $206. C: a 4.15% required FCF yield on $1,619M normalised = $214. Weighted 40/35/25. Bull $306, bear $140. - THE ANGLE - THE BASE WAS NOT CLEAN: per the Q2 2026 MD&A, Franco-Nevada sold 14,000 gold ounces for $59.8M and booked a $1.0M LOSS. In Q2 2025 it sold 44,484 ounces for $147.1M and booked a $42.2M GAIN. Timing 'varies based on gold prices and the Company's liquidity needs' - a treasury decision, and NOT an adjusting item. Strip it from both periods and adjusted earnings go ~$205M to ~$350M: growth near 70%, not the 46% printed. - THE PRINT: revenue $580.9M +57%. 132,405 GEOs sold +18% (122,205 net). Operating cash flow $482.5M +12%. Adjusted EBITDA $529.7M ($2.75) +45%. GAAP net income $354.0M ($1.84) +43% - HIGHER than the $1.81 adjusted figure, because the adjustments removed a $7.1M FX gain. Cost of sales just $45.9M = $347 per GEO against $4,387 of revenue per GEO. EPS BASIS PROVEN: FMP's 1.24 for Q2 2025 equals the release's adjusted $1.24, and $4.19 H1 less $1.81 = $2.38 for Q1. - BALANCE SHEET AND GUIDANCE: zero borrowings. Cash $1,014.2M, investments $1,215.1M, total liabilities just $681.5M of which $503.8M is deferred tax. Available Capital $4.3B. Dividend $0.44/qtr, a 0.75% yield, ~22% of our 2026 estimate. FY26 guidance HELD at 510,000-570,000 GEOs, now tracking the UPPER half; H1 did 268,758. Cobre Panama: the whole stockpile programme is ~23,100 gold oz plus 265,000 silver oz over two years - ~3% of H2. What to watch: UP: the implied ~286,000-GEO second half landing; Cobre Panama stockpile deliveries arriving from Q3; the ministerial commission moving toward a restart; WTI holding near $92.79 against a $70 plan. DOWN: gold's quarterly average continuing to slide from $4,875 to $4,517; the 29x multiple de-rating as metal normalises; Candelaria, Cote Gold, Greenstone or Valentine slipping their ramps. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision. Learn investing free in the Charged Alpha app: https://chargedalpha.com/app?source=youtube&ref=video Educational only. Not financial advice.