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Freehold Royalties
(TSX:FRU)
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Rating:71Outperform
Price Target:
C$19.00
▲(12.03% Upside)
Action:Reiterated
Date:07/31/26
The score is driven primarily by solid financial performance (strong margins, healthy cash generation, and manageable leverage) and a constructive earnings update (maintained guidance, improving QoQ results, and better balance-sheet metrics). Technicals are supportive with the stock trading above key moving averages, while valuation is a headwind due to a high P/E despite an attractive dividend yield.
Positive Factors
Cash Generation
Sustained operating cash flow and meaningful FCF indicate durable internal funding capacity. Over the next 2–6 months this supports dividends, modest M&A and debt paydown without relying on equity issuance, improving financial flexibility through commodity cycles.
Negative Factors
Commodity & Revenue Cyclicality
Royalty revenues are inherently tied to commodity prices and operator activity. Over the next 2–6 months, price swings or lower drilling activity can materially compress revenue and FFO, making cash generation and payout levels less predictable despite strong margins.
Read all positive and negative factors
Positive Factors
Negative Factors
Cash Generation
Sustained operating cash flow and meaningful FCF indicate durable internal funding capacity. Over the next 2–6 months this supports dividends, modest M&A and debt paydown without relying on equity issuance, improving financial flexibility through commodity cycles.
Read all positive factors
Freehold Royalties (FRU) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$2.82B
Dividend Yield6.31%
Average Volume (3M)588.13K
Price to Earnings (P/E)20.0
Beta (1Y)0.58
Revenue Growth0.67%
EPS Growth11.91%
CountryCA
EmployeesN/A
SectorEnergy
Sector Strength52
IndustryOil & Gas Exploration & Production
Share Statistics
EPS (TTM)0.86
Shares Outstanding163,960,330
10 Day Avg. Volume536,220
30 Day Avg. Volume588,130
Financial Highlights & Ratios
PEG Ratio-0.62
Price to Book (P/B)2.49
Price to Sales (P/S)7.95
P/FCF Ratio13.02
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$19.00Price Target Upside12.03% Upside
Rating ConsensusHold
Number of Analyst Covering4
EPS Forecast (FY)0.9
Revenue Forecast (FY)C$369.57M
Freehold Royalties Business Overview & Revenue Model
Company Description
Freehold Royalties Ltd. operates as an energy royalty enterprise, possessing ownership interests in properties rich with oil, natural gas, natural gas liquids, and potash across Western Canada and the United States. The company manages approximate...
How the Company Makes Money
Freehold Royalties makes money primarily by owning mineral title and royalty interests and collecting a contracted share of production or revenue from oil and natural gas wells drilled and operated by third parties on lands where Freehold holds th...
Freehold Royalties Earnings Call Summary
Earnings Call Date:Jul 29, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 11, 2026
Earnings Call Sentiment Positive
The call conveyed a positive operational and financial momentum: production was in line with guidance, realized prices and revenue rose meaningfully (revenue +29% QoQ; FFO +30% QoQ), drilling activity accelerated (gross wells +35% QoQ) and well productivity improved (Canada +30% YoY; U.S. +15% YoY). Balance sheet metrics strengthened (net debt down $24M to $251M; net debt/FFO = 1x) and the company continued returns to shareholders. Key near-term negatives were Permian gas egress constraints that caused negative gas pricing for most of Q2 and some timing uncertainty around when newly drilled wells will contribute to production. Overall, highlights outweigh the lowlights.Positive Updates
Production in Line with Guidance
Production averaged 15,622 BOE/day in Q2 2026 with a 66% liquids weighting, in line with company expectations and within maintained 2026 guidance of 15,500–16,300 BOE/day.
Negative Updates
Waha Hub Egress Constraints and Negative Gas Pricing
Egress constraints at the Waha Hub during Q2 caused unusually wide gas differentials to NYMEX and resulted in negative gas pricing for most of the quarter, materially depressing Permian gas revenues until takeaway capacity improved late in June.
Read all updates
Q2-2026 Updates
Positive
Negative
Production in Line with Guidance
Production averaged 15,622 BOE/day in Q2 2026 with a 66% liquids weighting, in line with company expectations and within maintained 2026 guidance of 15,500–16,300 BOE/day.
Read all positive updates
Company Guidance
Freehold reiterated 2026 production guidance of 15,500–16,300 BOE/d (Q2 averaged 15,622 BOE/d, 66% liquids) and said improved drilling and completion activity supports growth in H2 2026; Q2 metrics included 300 gross wells drilled (a 35% increase vs Q1’s 223), 226 gross U.S. wells (≈82% in the Permian), 74 Canadian wells, 1.8 net wells in Canada and 0.9 net wells in the U.S., and industry rig counts up ~20% YoY. Operational performance showed ~30% YoY well productivity improvement in Canada and ~15% in the U.S., Midland Basin spuds averaged 3 miles (+10% YoY), and 45 new Canadian leases were added; Freehold also noted ~2 Bcf/d of takeaway capacity added late in the quarter (and ~4.5 Bcf/d expected by Q1) which alleviated prior Waha constraints. Financial guidance/positioning highlighted Q2 royalty revenue of $100M (+29% vs Q1), funds from operations of $78M ($0.47/sh, +30% vs Q1), realized oil of CAD122/bbl and average realized price just over $69/BOE (vs ≈$55/BOE in Q1), cash costs ≈$6.50/BOE (vs $7.02 in Q1), $44M returned to shareholders (57% payout), $9M of Q2 acquisitions (YTD $29M adding 12,500 acres), net debt down $24M to $251M and net debt/FFO ≈1x—supporting maintenance of the 2026 outlook.Freehold Royalties Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
76
Positive
Cash Flow
71
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 322.23M | 313.46M | 309.48M | 314.57M | 393.02M | 206.19M |
| Gross Profit | 212.19M | 197.29M | 199.06M | 305.08M | 281.72M | 118.17M |
| EBITDA | 291.44M | 250.48M | 308.18M | 279.34M | 360.27M | 186.67M |
| Net Income | 140.31M | 91.78M | 149.45M | 131.90M | 209.19M | 72.08M |
Balance Sheet | ||||||
| Total Assets | 1.40B | 1.37B | 1.48B | 1.12B | 1.21B | 1.07B |
| Cash, Cash Equivalents and Short-Term Investments | 0.00 | 0.00 | 0.00 | 0.00 | 524.00K | 2.19M |
| Total Debt | 284.90M | 284.65M | 302.31M | 124.59M | 158.28M | 147.81M |
| Total Liabilities | 387.75M | 372.68M | 383.02M | 194.66M | 251.66M | 179.54M |
| Stockholders Equity | 1.02B | 998.39M | 1.10B | 923.76M | 960.34M | 890.97M |
Cash Flow | ||||||
| Free Cash Flow | 188.94M | 191.25M | -188.38M | 206.27M | 136.55M | -214.98M |
| Operating Cash Flow | 232.84M | 235.38M | 223.33M | 216.92M | 327.35M | 162.02M |
| Investing Cash Flow | -44.16M | -42.11M | -400.37M | -21.18M | -191.18M | -376.61M |
| Financing Cash Flow | -188.68M | -193.27M | 177.03M | -196.24M | -138.08M | 215.78M |
Freehold Royalties Technical Analysis
Positive
16.96
Price Trends
16.70
Positive
16.91
Positive
15.93
Positive
Market Momentum
0.09
Negative
58.55
Neutral
82.24
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:FRU, the sentiment is Positive. The current price of 16.96 is above the 20-day moving average (MA) of 16.53, above the 50-day MA of 16.70, and above the 200-day MA of 15.93, indicating a bullish trend. The MACD of 0.09 indicates Negative momentum. The RSI at 58.55 is Neutral, neither overbought nor oversold. The STOCH value of 82.24 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:FRU.
Freehold Royalties Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | C$3.16B | 16.99 | 24.24% | 3.34% | 12.71% | 0.77% | |
75 Outperform | C$8.10B | 33.34 | 9.48% | 2.99% | 6.68% | 11.02% | |
71 Outperform | C$2.82B | 20.00 | 8.81% | 6.37% | 0.67% | 11.91% | |
71 Outperform | C$2.25B | 2.96 | 9.34% | 6.53% | 13.63% | 361.28% | |
65 Neutral | $15.17B | 7.61 | 4.09% | 5.20% | 3.87% | -62.32% | |
62 Neutral | C$2.46B | -5.63 | -33.68% | 3.34% | -2.21% | -142.44% | |
54 Neutral | C$3.47B | 103.46 | 2.73% | ― | -12.72% | -67.54% |
* Energy Sector Average
TSE:FRU
Freehold Royalties
17.12
4.97
40.89%
TSE:VET
Vermilion Energy
16.68
6.12
57.97%
TSE:HWX
Headwater Exploration
13.25
6.50
96.21%
TSE:PSK
PrairieSky Royalty
34.67
12.09
53.53%
TSE:PXT
Parex Resources
24.28
9.44
63.62%
TSE:IPCO
International Petroleum Corporation
31.60
8.77
38.41%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.