Royal Gold’s (RGLD) Profits Doubled, So Why Add A Buyback Now?

Royal Gold (NASDAQ:RGLD) posted second-quarter 2026 results connected August 6, and the numbers amusement a institution operating astatine a antithetic standard than a twelvemonth ago. Revenue reached $451 million, operating currency travel deed a grounds $335 million, and nett income landed astatine $236 million, gains of 115%, 119%, and 79% implicit the aforesaid play past year. Yet absorption inactive spent the 4th buying backmost shares, arguing the marketplace has not caught up to what the portfolio is worth.

Bull Case: A Portfolio That Finally Pays For Itself

The strongest awesome successful the 4th is diversification. No azygous royalty oregon watercourse contributed much than 13% of revenue, and lone 2 assets crossed 10%, a nonstop effect of the 2025 acquisitions absorption had promised would dispersed retired risk. Adjusted nett income came to $218 million, oregon $2.56 per share, up 41% year-over-year, and executives pointed to gains successful GEOs per share, adjusted EBITDA per share, operating currency travel per share, and EPS arsenic impervious the 2025 deals are accretive alternatively than dilutive.

Capital returns backed that up. Royal Gold paid $40 cardinal successful dividends astatine an annualized complaint of $1.90 per share, 6% higher than a twelvemonth earlier, and repurchased 147,000 shares for $30 cardinal during the quarter. At the aforesaid time, the institution repaid $200 cardinal connected its revolver, followed by different $75 cardinal successful July, with a further $100 cardinal planned for mid-August, and absorption expects the equilibrium afloat repaid successful the 4th quarter. Total disposable liquidity stood astatine $1.2 cardinal astatine 4th end.

Bear Case: The Costs Quietly Piling Up

The aforesaid 4th that produced grounds currency travel besides produced grounds costs. Depreciation, depletion, and amortization disbursal jumped to $96 cardinal from $31 cardinal a twelvemonth earlier, oregon $962 per GEO compared with $487 per GEO, driven mostly by higher carrying values from the Kansanshi watercourse and the Sandstorm and Horizon assets picked up successful 2025. General and administrative disbursal roseate to $13.4 cardinal for the quarter, and the institution present expects full-year G&A to onshore adjacent the apical of its $50 cardinal to $60 cardinal guidance range. Interest disbursal climbed to $10 cardinal from $1.5 million, a byproduct of carrying a larger revolver equilibrium for portion of the year.

Part of the header maturation was not repeatable. Royal Gold recognized $22 cardinal of incremental gross this 4th from an precocious transportation of 5,000 ounces tied to the Relief Canyon settlement, pulling guardant 1,175 ounces primitively scheduled done 2027 and concentrating them into the archetypal fractional of 2026. Severe wintertime upwind successful Chile besides caused impermanent disruptions astatine some Andacollo and Caserones, though neither relation has changed full-year guidance.