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

Royal Gold (NASDAQ:RGLD) reported impressive second-quarter 2026 results on August 6, with revenue reaching $451 million, a 115% increase year-over-year. Operating cash flow hit a record $335 million, and net income soared to $236 million, a 79% jump from the same period in 2025. Despite these robust numbers, the company continued its share buyback program, claiming the market has yet to fully appreciate the value of its portfolio.

The standout aspect of the quarter was the diversification achieved through recent acquisitions, with no single royalty or stream contributing more than 13% of revenue. Adjusted net income was $218 million, or $2.56 per share, marking a 41% year-over-year increase. The company paid $40 million in dividends, a 6% increase from the previous year, and repurchased 147,000 shares for $30 million during the quarter.

Moreover, Royal Gold repaid $200 million on its revolver, with an additional $75 million in July and another $100 million planned for mid-August, aiming for full repayment by the end of the year. Total available liquidity stood at $1.2 billion at quarter end. While the quarter saw record costs, including a significant jump in depreciation, depletion, and amortization expenses, these were offset by strong revenue growth and efficient cost management.

Hedge fund ownership increased from 39 funds to 44, indicating growing institutional confidence. Short interest is low, at just 4.09% of the float, suggesting limited skepticism about the stock. The shares trade at a forward P/E of 21.51, pricing in continued earnings growth. Despite the complexities introduced by the 2025 acquisitions, such as higher depreciation and increased general and administrative expenses, the company's balance sheet is improving, potentially leading to debt elimination by year-end.

While the company's growth trajectory appears promising, the article suggests that certain AI stocks may offer greater upside potential with less downside risk.