Is Now the Right Moment to Reassess Royal Gold After 44% Rally in 2025?

Thinking about what to do with Royal Gold right now? You are not alone. The stock has been turning heads lately, catching the attention of investors who are weighing up whether this is the moment to buy, hold, or trim their positions. Royal Gold’s share price sits at $194.47 after some intriguing moves recently. A dip of 2.9% over the past week is enough to make even long-term holders pause, yet the stock delivered a solid 2.7% return over the last month, and an impressive 44.5% gain year-to-date. Over longer timelines, Royal Gold really shines, with returns of 38.4% over the past year, 125.2% over three years, and 68.7% for the past five years. Clearly something is driving this resilience, and a key factor has been ongoing shifts in the gold market and investor appetite for assets seen as stores of value amidst macro uncertainty.

Of course, past performance only tells part of the story. Savvy investors want to know what’s under the hood. That is where valuation comes in. On our six-point undervaluation check, Royal Gold scores a 4, meaning it comes out undervalued on four of the six metrics we track. Not bad for a well-established gold royalty company, but the real insight comes from understanding which methods point to genuine value and which might be missing context. In the next section, I will break down these valuation approaches and reveal how much weight they truly deserve, along with one advanced perspective you will not want to miss.

Royal Gold delivered 38.4% returns over the last year. See how this stacks up to the rest of the Metals and Mining industry.

Approach 1: Royal Gold Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates the value of Royal Gold by forecasting its future cash flows and discounting them back to present value. This approach reflects what investors are willing to pay today based on the company’s ability to generate future cash over time.

Currently, Royal Gold’s Free Cash Flow stands at $107.7 Million. Analysts forecast healthy growth over the next five years, with projections indicating Free Cash Flow could reach $1.06 Billion by 2029. Beyond the initial analyst projections, Simply Wall St extrapolates further and suggests continued growth through 2035. These long-term cash flows are discounted to today’s dollars to capture the time value of money and risks to future growth.

Based on these cash flow projections, the DCF model arrives at an intrinsic value of $316.57 per share. This is significantly above the current share price of $194.47, indicating the stock is trading at a 38.6% discount to its estimated fair value.

Story Continues

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Royal Gold.RGLD Discounted Cash Flow as at Oct 2025

Our Discounted Cash Flow (DCF) analysis suggests Royal Gold is undervalued by 38.6%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Royal Gold Price vs Earnings

The Price-to-Earnings (PE) ratio is one of the most commonly used valuation tools for profitable companies like Royal Gold. It tells investors how much they are paying today for each dollar of current earnings, making it a reliable way to measure value when profits are steady and predictable.

Growth prospects and risk levels play a big role in what a “normal” or “fair” PE ratio should be. Fast-growing, lower-risk companies can typically justify higher PE ratios, while those with slower growth or higher risk tend to trade at lower multiples.

Royal Gold currently trades at a PE ratio of 28.5x. For comparison, the Metals and Mining industry’s average PE is 24.6x, and Royal Gold’s direct peers average 29.4x. At first glance, Royal Gold appears fairly valued relative to its sector and peer group, trading in the same ballpark as other leading gold royalty and mining companies.

However, Simply Wall St’s proprietary Fair Ratio model takes the analysis a step further by calculating what a fair PE multiple should be for Royal Gold, based on its specific growth outlook, risks, margins, and size. This Fair Ratio, at 22.4x, is designed to reflect what investors should reasonably expect to pay, blending both industry context and company-specific fundamentals.

Because Royal Gold’s current PE is meaningfully higher than its Fair Ratio, it looks somewhat overvalued on this metric, even accounting for its strengths.

Result: OVERVALUEDNasdaqGS:RGLD PE Ratio as at Oct 2025

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Royal Gold Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is your personal story about what you believe will happen to Royal Gold, expressed through your own estimates of the company’s fair value, growth rates, profit margins, and future earnings. Narratives give context to the numbers, helping you connect Royal Gold’s business outlook (such as project investments, new acquisitions, or market risks) to realistic financial forecasts and a clear fair value.

Narratives are easy to use and available right within the Community page on Simply Wall St, where millions of investors share and refine their perspectives. By comparing your Narrative’s fair value to the current price, you can confidently decide whether to buy, hold, or sell, knowing you are guided by your own assumptions (which update automatically as new news, earnings, or company events unfold). For example, one Royal Gold Narrative sees a fair value as high as $237, based on robust growth from copper projects and dividend strength, while another more cautious view pegs fair value at $182, citing gold price risks and increased debt. All of this is presented in a format that adapts as new information arrives.

Do you think there's more to the story for Royal Gold? Create your own Narrative to let the Community know!NasdaqGS:RGLD Community Fair Values as at Oct 2025

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include RGLD.

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