Stockchase Opinions

Stockchase Insights Freehold Royalties Ltd FRU-T BUY Aug 01, 2025

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

Freehold Royalties reported strong second quarter (Q2) 2025 earnings, highlighted by solid production growth but with a year-over-year decline in profitability on lower commodity prices. Revenue was $78 million, reflecting continued operational momentum and a 9% year-over-year increase in total production. Total production grew by 9% compared to Q2 2024, indicating strengthened asset performance and successful leasing activity. Net income for the quarter was $6.24 million, which is a significant decrease versus $39.3 million in Q2 2024. Still, we like the production growth and valuation, and would see it as a BUY for the sector. 
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$13.010

Stock price when the opinion was issued

Financial Services
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BUY
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

Manulife was a large seller last year, but this year we do not see significant transactions. The sector has bounced around this year, and FRU is down 13% YTD. The last quarter was fine, but estimates have been ticking down over the past month (most likely commodity-price related). We see no materially negative news of late. 
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HOLD

She'd hold it today. Oil prices are down, and so the stock price has come off. Yield is 9%, pretty safe even at these lower commodity prices. As a royalty company, capex is low. Pursuing acquisitions in US, but rate will be slow due to competition. She's happy to own for yield right now.

PARTIAL BUY

Is a low-risk, low-volatility, boring stock with limited upside, but pays an 8.8% dividend yield, which is why he has owned it in the past. The div is sustainable down to $50 oil. Their last quarter was good because their Permian assets are growing faster than expected. It trades at half the multiple as Prairie Sky and other peers.

DON'T BUY

Lower risk that E&P. It's chosen to be more active in the US, and activity levels have been a bit higher there. Q1 showed activity up 30% in US, down 30% in Canada. Now almost 70% of activity is in US. 

Sometimes a Canadian company gets its head handed to them, because it just isn't part of the culture. Smaller than peers, so trades at a discount. He'd prefer TPZ. Yield of just under 10%.

DON'T BUY

He focuses on the top third of relative price performers in a group. The best companies tend to keep getting better. Decent assets, but relative price performance versus the market has been weakening since 2022. Lots of other opportunities for yield and dividend growth in the energy space. He'd prefer ARX or TOU.

BUY

It acquires and manages oil and gas royalties which is less risky than the actual production. Has a dividend of 5 1/2% with a forward dividend over 8%. There is no risk re a dividend cut. Scores 8 out of 10 fundamentally and 10 out of 10 on valuation.

BUY

Still in a downward trend, but getting very close to the top of that downward trend. Breaking out right now, and if that continues it looks like a good buy. Lots of support around $12.60; if it can hold above that, worth holding on to. Will probably run its course around $14, where there's very strong resistance. Yield is 8%.

DON'T BUY

It is in bottom half of the data base but the payout is probably sustainable. ROC is negative.

BUY

PE ~13.3x. Great value. Strong income play, no signs of a dividend cut. Trading mid-range of its 52-week band. Analysts rate it a hold. Emphasizing US growth and strategic consolidation. Q4 production rose 10% YOY, dividend hiked. Still likes it. Yield is 8.2%.