Franco-Nevada (TSX: FNV) stock has been a star performer so far in 2025, surging 64% year to date and hitting new 52-week highs. With bullion prices setting new records above US$3,600 an ounce and silver reaching record highs this year, the precious metals royalty company is experiencing its best time in the stock market. But investors are wondering: has the ship sailed, or is this top Canadian gold stock still a buy in September 2025?
Source: Getty Images
A golden business model shining brighter
Franco-Nevada isn’t a typical mining stock. It’s a royalty and streaming company, which means it provides upfront funding to mining operators in exchange for the right to buy metals at a (usually low) fixed cost in the future or receive a percentage of revenue from the mine. This unique structure allows it to benefit from high metal prices without being exposed to the crippling operating cost inflation, labour disputes, and other operational headaches that often plague traditional mining companies.
The company’s second-quarter results were a testament to this model’s power. Revenue soared 42% year over year to a record $369.4 million, and operating cash flow exploded by 121% to $430.3 million. This was driven primarily by soaring gold prices, as the amount of gold equivalent ounces (GEOs), a standardized measure combining all metal and energy production, only grew by a modest 2%. This operational leverage is a key reason Franco-Nevada’s operating and net profit margins are so high.
Franco-Nevada’s growth engine: Acquisitions fuel future earnings and cash flow
Franco-Nevada’s management has been aggressively deploying capital to secure future growth. Recent acquisitions are a major reason for optimism. The company spent over $1 billion to acquire a royalty on the Côté Gold Mine in Ontario, one of Canada’s newest large-scale mines. It also picked up a royalty on the highly promising Arthur Project in Nevada and increased its stake in the Gold Quarry mine.
These strategic moves, paid for with a strong balance sheet boasting over $1.1 billion in available capital, will be key drivers for increased production in the second half of 2025 and beyond.
The company guides for a whopping 40% year-over-year revenue increase for the full year 2025. With 120 assets already producing cash flow and another 38 in advanced development, its revenue pipeline is flush with potential.
Valuation: FNV stock is pricey, but with a premium justification
There’s no sugarcoating it: Franco-Nevada stock is expensive. With a forward price-to-earnings (P/E) ratio of 49.2, it trades at a significant premium to the average gold industry stock (with a P/E of 26.3). However, you often get what you pay for.
Franco-Nevada stock’s valuation premium reflects its superior, low-risk business model, its stellar growth profile, and its pristine debt-free balance sheet. It’s also still cheaper than its closest peer, Wheaton Precious Metals, which has a P/E of 60.
Investors seeking a hedge against market volatility and inflation without the operational risks of mining may find the premium well worth it.
That said, FNV isn’t that much of an income investor’s friend right now. Its quarterly dividend yields 0.8% despite increases for 18 consecutive years. But for IPO investors, the yield on original cost is in the double-digit range now.
Is Franco-Nevada stock still a buy?
So, is Franco-Nevada stock still a buy after its spectacular run? The answer is a cautious yes, but with a strategy. Chasing any stock at 52-week highs can be risky. The company’s outlook is undoubtedly bright, powered by high gold prices and shrewd acquisitions. However, if metal prices were to fall, the stock could see a pullback. The ideal entry point for new money would be on any market-driven dip. That said, long-term investors looking for a low-risk way to hold gold and a top Canadian gold stock to buy in September may still find Franco-Nevada a premier choice. Its unique model acts as a powerful hedge, and its growth story is far from over.
