To The Moon

$Gold Royalty Corp(GROY)$

Hi Tiger, Gold Royalty Corp is currently one of the undervalue Growth stocks, and in this article, we’ll dive deeper into what makes this company so intriguing. We’ll review their recent earnings and performance, discuss some price targets, and I’ll share my personal take on why I believe this stock presents a great investment opportunity right now.

What is Gold Royalty Corp?

Gold Royalty Corp is a precious metals royalty and streaming company specializing in acquiring and managing a portfolio of royalties and streams tied to gold and other valuable metals. Operating in the mining sector, the company provides capital to mining operations in return for a share of future production or revenue from specific projects.

Their business model involves long-term contracts where they generate revenue through royalties and streams—agreements that grant them payments based on the production or sale of metals from the mining projects they fund.

Let’s take a closer look at their recent earnings and performance!

Earnings Overview

Gold Royalty Corp reported record-breaking results in both revenue and operating free cash flow. For the third quarter, revenue grew an impressive 90% year-over-year, reaching $2.6 million. Year-to-date revenue stands at $9 million, putting the company on track to achieve its first year of positive cash flow, with $1.3 million generated in operating cash flow so far.

The company is poised to meet its annual revenue guidance of $13–14 million, with strong growth anticipated in the fourth quarter. This performance is driven by consistent contributions from key assets, including the KOT gold mine. Additionally, Gold Royalty is set to receive its first revenue from the Verz copper stream in Q4. The company’s Q4 revenue target is estimated at $4–5 million, which would bring total annual revenue to between $13 million and $14 million, marking another record year. This would represent a remarkable 160% revenue growth compared to 2023.

Cash Flow Growth Potential:

Gold Royalty Corp is at an inflection point, with significant cash flow growth on the horizon as production scales up and gold prices show potential for increases. If gold prices were to reach $3,200 per ounce, the company’s annual revenue could surge to nearly $90 million by 2030.

This outlook is supported by a growing portfolio of high-quality assets, increasing production as more mines reach full capacity, and favorable market conditions for gold. Gold Royalty is well-positioned for sustained revenue growth, highlighting its strong future prospects.

Assets and Growth Pipeline

Gold Royalty Corp is strategically positioned for sustained long-term growth, supported by a well-diversified portfolio of assets. The company currently has seven cash-flowing assets, forming a strong foundation for steady revenue generation.

Beyond these, Gold Royalty also holds several development-stage assets nearing production. These projects, including high-potential ventures like Odyssey and Ren, are expected to significantly boost revenue in the coming quarters and years as they ramp up operations.

In addition, the company has a substantial portfolio of exploration-stage assets, offering considerable growth potential. While these assets are in the early stages of development, their progression could unlock new revenue streams and further enhance Gold Royalty’s cash flow.

Upcoming Catalysts:

Gold Royalty has several catalysts poised to drive significant growth in the near and medium term. Key projects like Borbera, Côté Gold, and Verz are expected to deliver substantial production increases:

• Borbera: Scheduled for initial production in Q1 2025.

• Côté Gold: On track to reach 90% mill throughput, signaling efficient operations.

• Verz: Set to begin commercial production shortly.

These milestones will be critical drivers for revenue growth, positioning Gold Royalty Corp to achieve higher performance in the upcoming quarters and solidifying its track record of success.

Track Record:

Gold Royalty Corp has demonstrated an impressive track record since its IPO in 2021, consistently expanding its royalty portfolio and driving significant growth. The company has grown from just 18 royalties at inception to over 240 today, showcasing its strategic focus on building a vast and well-diversified asset base. With significant cash flow growth on the horizon, Gold Royalty is well-positioned for robust revenue generation in the future.

Attractive Valuation:

Gold Royalty Corp is currently trading at a notably low price-to-net-asset-value (P/NAV) ratio of approximately 0.42x, compared to the sector average of around 1.1x. This significant valuation gap highlights substantial upside potential as the company scales its operations and grows its revenue.

When compared to sector leaders like Wheaton Precious Metals and Franco-Nevada, which have much higher P/NAV ratios, Gold Royalty stands out as undervalued. As the company continues to expand its revenue streams and cash flow, there is ample room for valuation growth, making it an attractive investment opportunity with strong potential for re-rating in the market.

Stock Performance:

Gold Royalty Corp’s stock has declined by 75% over the past five years and is currently trading at $1.25 per share. Despite this, the company’s fundamentals have improved dramatically during the same period. Since its IPO, the royalty portfolio has grown from just 18 royalties to over 240, and the company is now on the verge of generating significant free cash flow growth.

With the stock trading near its 52-week low, this could present a compelling buying opportunity at a discounted valuation, offering investors an attractive entry point.

Price Targets:

Analysts are optimistic about Gold Royalty Corp’s future. The stock has a consensus rating of "Strong Buy," with an average 12-month price target of $3.25, representing a potential 160% increase from its current price. The high estimate is $5.50, which suggests an impressive 340% upside. Even the lowest price target of $2.25 nearly doubles the current price, underscoring the significant growth potential in the coming months.

Conclusion

I believe Gold Royalty Corp offers a compelling investment opportunity with significant growth potential. The company is well-positioned for revenue growth, especially with key projects ramping up in the near term. The current valuation is particularly attractive compared to many other precious metals and royalty companies, as Gold Royalty is trading at less than half of its net asset value. Additionally, analyst price targets are significantly higher than the stock’s current price, indicating it is undervalued.

Gold Royalty boasts a high-quality portfolio of tier-one royalties and a robust growth pipeline. The royalty model is capital-light, highly scalable, and ensures high profit margins, making it a business with substantial upside potential. This model is also less risky than operating a mine, offering more diversification and protection against inflation.

As the company continues to grow its free cash flow, there is also the potential for future dividends and share buybacks, which makes Gold Royalty an appealing option for dividend-focused investors.

Disclaimer this is not financial advice.

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