Royal Gold: revenue doubled, but profit lagged on one-offs and higher depletion

On July 21, Royal Gold released preliminary financial information for the second quarter of 2026. Revenue for the quarter reached $450.5 million, up 114.9% year-on-year, EBITDA rose 117.4% to $376.1 million, while net profit increased only 78.6% to $236.4 million. The lag in profit was due to one-off write-offs and higher depletion related to the Relief Canyon settlement and increased production. At the current price, the shares look attractive: EV/EBITDA LTM is 14.8 versus the three-year average of 19.8, and the dividend yield of 0.71% is well covered.

Key takeaways

— Revenue grew 114.9% on record gold prices and higher sales volumes

— Profit lagged revenue due to one-off write-offs and higher depletion

— EBITDA margin remains high at 83.5%

— Debt burden decreased: net debt fell to $213.4 million

— Dividend yield of 0.71% with stable coverage

— EV/EBITDA LTM of 14.8 is below the three-year average of 19.8

— The portal model indicates 26% upside for the shares

Attractiveness

Key figures, USD bn

Revenue grew 114.9% on record gold prices and higher sales volumes

Royal Gold's revenue in the second quarter of 2026 reached $450.5 million, up 114.9% year-on-year. This growth was driven by both record gold prices and higher sales volumes. The average gold price in the quarter was $4,506 per ounce, significantly above last year's levels.

The stream segment made the main contribution, with revenue of $311.0 million from the sale of 69,000 gold equivalent ounces. The royalty segment added another $137–142 million. Sales of key metals increased across the board: gold – 54,500 ounces, silver – 595,500 ounces, copper – 2.5 million pounds.

Revenue dynamics are accelerating: in the first quarter of 2026 growth was 142.5%, while in the second quarter it was 114.9%. The slowdown is due to the high base effect from last year when revenue began to rise sharply. Nevertheless, the absolute revenue level remains very high.

Profit lagged revenue due to one-off write-offs and higher depletion

Net profit in the second quarter of 2026 grew 78.6% to $236.4 million, significantly below revenue growth. The main reason is one-off items related to the Relief Canyon settlement. Royal Gold reached an agreement with Americas Gold and Silver to settle remaining gold delivery obligations early: the company received 5,000 ounces of gold and 2,652,532 shares of Americas, resulting in an additional depletion charge of $12 million.

In addition, depreciation, depletion and amortization (DD&A) increased significantly: in the royalty segment it was $95–99 million, while in the stream segment the cost of sales reached $871 per ounce. This is due to higher sales volumes and changes in the sales mix.

As a result, the net profit margin declined to 52.5% from 63.1% a year earlier. However, the EBITDA margin remained high at 83.5% versus 82.5% a year earlier. This indicates that operating efficiency was not affected, and the decline in net profit is one-off in nature.

EBITDA margin remains high at 83.5%

EBITDA in the second quarter of 2026 was $376.1 million, up 117.4% year-on-year. The EBITDA margin reached 83.5%, slightly above last year's 82.5%. This is a very high level, reflecting low costs and high metal prices.

EBITDA growth outpaced revenue growth, indicating positive operating leverage. However, higher depletion and one-off write-offs did not affect EBITDA, as these items are below operating profit. Thus, the company's operating efficiency remains high.

It is important to note that an EBITDA margin of 83.5% is one of the highest in the industry, confirming Royal Gold's status as a high-margin company.

Debt burden decreased: net debt fell to $213.4 million

Royal Gold's net debt at the end of the second quarter of 2026 was $213.4 million, significantly lower than at the end of the first quarter ($361.5 million) and the end of 2025 ($698.9 million). The reduction was due to the repayment of $200 million under the revolving credit facility. As of June 30, 2026, the outstanding balance was $400 million, with $1.0 billion undrawn and available.

The net debt to EBITDA LTM ratio is 0.54, a comfortable level. The company also repurchased 147,205 shares for $30 million at an average price of $203.80 per share.

Operating cash flow over the last 12 months was $704.8 million, comfortably covering debt servicing. This allows the company to maintain financial stability and continue investing in growth.

Dividend yield of 0.71% with stable coverage

Royal Gold pays dividends, and over the last 12 months the dividend yield is 0.71%. The company did not disclose the size of the latest dividend in the provided materials, but we estimate that the current annual dividend may be increased given profit growth and strong cash flow. Our estimate is based on a payout ratio that has historically been around 20-30% of free cash flow.

At the current share price of $187.36 (before the release) and a market capitalization of $18.26 billion, the dividend yield remains modest but stable. For comparison, the key US rate is around 5%, making the dividend yield less attractive relative to risk-free instruments. However, the potential for dividend growth and a strong balance sheet compensate for this shortcoming.

A risk to dividends could be a decline in gold prices or increased capital expenditures on development projects such as Hod Maden and Warintza. In the second quarter, the company invested $70 million in the Hod Maden project and $50 million in Warintza, which could limit free cash flow in the short term.

EV/EBITDA LTM of 14.8 is below the three-year average of 19.8

Royal Gold's current valuation on EV/EBITDA LTM is 14.8, below the three-year average of 19.8. This indicates that the shares are trading at a discount to their historical valuation. P/E LTM is 24.7, which may also be an attractive level for a company with high profitability.

The multiple declined amid significant EBITDA growth, which outpaced market capitalization growth. If the company maintains its current growth rate, the multiple could remain low or even decrease, creating potential for share price appreciation.

According to the portal's model, the fair value of the share, based on current commodity prices and the target EV/EBITDA, implies 26% upside from the current level. This is our own calculation, not a consensus forecast.

The portal model indicates 26% upside for the shares

Our model, which takes into account current gold prices and the target EV/EBITDA multiple, shows that the fair value of Royal Gold shares is 26% above the current market price. This is significant upside, making the shares attractive for investors willing to tolerate precious metal price volatility.

The model is based on conservative assumptions for gold prices and does not account for possible further price increases. If gold prices remain at current levels or rise, the upside could be even higher. However, it is worth remembering that the model is not a guarantee of future returns.

Since the release, the shares have already risen 40.1% (through September 9, 2026), partially reflecting this potential. Nevertheless, even after the rise, the shares may remain undervalued relative to historical multiples.

Valuation on the latest reported figures

Bottom line

Royal Gold delivered strong results in the second quarter of 2026: revenue grew 114.9%, EBITDA rose 117.4%, and the EBITDA margin reached 83.5%. However, net profit increased only 78.6% due to one-off write-offs and higher depletion related to the Relief Canyon settlement. Debt burden decreased: net debt fell to $213.4 million, with a net debt/EBITDA ratio of 0.54. Dividend yield is 0.71% with stable coverage. Valuation on EV/EBITDA LTM is 14.8, below the three-year average of 19.8, and the portal model indicates 26% upside. Given this, the shares look attractive for long-term investors despite the one-off factors that pressured profit.