Gold Royalty (NYSEAM:GROY) has solidified its financial footing by expanding its revolving credit facility to $75 million, introducing fresh flexibility and improved terms. The deal also includes the early retirement of its convertible debentures.
Momentum around Gold Royalty has been building, highlighted by a surge in share price returns with a 26% climb over the past week and a remarkable 254% year-to-date gain. These moves come as investors react positively to enhanced financial flexibility and the early payoff of convertible debt. This signals renewed optimism about the company's roadmap. Over the past year, total shareholder return stands at an impressive 240%, showing strong long-term performance alongside this recent upswing.
With shares soaring and financial flexibility on the rise, the big question is whether Gold Royalty remains undervalued at current levels or if the market is already anticipating the next wave of growth. Is there still a buying opportunity?
Most Popular Narrative: 8.3% Undervalued
Gold Royalty's most popular narrative places its fair value at $4.79 per share, with the last close at $4.39. This suggests the current price is still trading at a discount, despite the sharp rally.
The high fixed-cost structure of the business and increasing scale from newly producing royalties will result in meaningful operating leverage. This could translate incremental top-line growth into disproportionately higher net margins and improve overall profitability.
However, strong dependence on key mines and exposure to gold price swings could quickly challenge the upbeat outlook if setbacks or volatility occur.
If you're inclined to challenge the consensus or want to draw your own conclusions, you can explore the numbers and build a personalized outlook in just a few minutes.