Is Triple Flag Precious Metals (TSX:TFPM) Still a Buy After 1-Year 120.74% Return? A Deep Dive into Valuation Realism and Growth Sustainability

The streaming and royalty sector has emerged as a cornerstone of the gold investment landscape in 2025, driven by robust gold prices, macroeconomic tailwinds, and a capital-light business model that insulates firms from operational risks. Triple Flag Precious Metals (TSX:TFPM), a key player in this space, has delivered a staggering 120.74% return over the past year, raising critical questions: Is this momentum sustainable, and is the stock still a buy despite its recent outperformance? This analysis evaluates TFPM's valuation realism and growth sustainability against sector benchmarks and macroeconomic trends.

Valuation Realism: A Premium Justified?

Triple Flag Precious Metals currently trades at a Price-to-Earnings (PE) ratio of 35.5x, significantly higher than the sector's peer average of 23.4x. This premium suggests the market is pricing in strong future growth, but whether it is justified depends on the company's ability to outperform expectations. GuruFocus' GF-Value metric further indicates modest overvaluation, with a Price-to-GF-Value ratio of 1.19. However, sector-specific dynamics complicate this assessment.

The streaming/royalty sector has demonstrated exceptional resilience in 2025, with Franco-Nevada reporting a 42% year-over-year revenue surge in Q2 2025. Companies in this space benefit from a structural advantage: they provide upfront capital to miners in exchange for a share of future production or revenue, avoiding operational costs while capturing upside from rising gold prices. This model has historically supported high EBITDA margins (70–90%), which TFPM mirrors, with an Operating Margin (TTM) of 58.42% as of September 2025.

Analysts remain cautiously optimistic. A 12-month average price target of CA$53.36 implies a 9.5% upside from the current share price of CA$48.88, suggesting the market still sees value despite the recent rally. However, investors must weigh this against the risk of a valuation correction if gold prices stagnate or sector growth slows.

Growth Sustainability: Sector Strength and Strategic Execution

TFPM's growth trajectory appears well-supported by both historical performance and sector trends. Over the past three years, the company has delivered a 13.50% average annual revenue per share growth rate, outpacing the broader sector's variable growth rates. For Q3 2025, TFPM reported Adjusted EBITDA of $78.5 million, a 27.3% increase compared to $61.7 million in Q3 2024. This acceleration aligns with sector-wide momentum, as evidenced by Gold Royalty Corp's record $2.5 million in Adjusted EBITDA for the same period.

The sector's growth is underpinned by macroeconomic forces. Central bank demand for gold hit record levels in 2025, while ETF inflows surged to $3.2 billion in July alone, pushing total assets under management to $386 billion. These trends reflect a global shift toward inflation-protected assets, a tailwind that directly benefits streaming/royalty firms. Additionally, the sector's capital-light structure allows companies like TFPM to scale rapidly through accretive acquisitions, as highlighted by its record operating cash flow per share in Q3 2025.

However, sustainability hinges on TFPM's ability to maintain its competitive edge. The company's exposure to high-grade gold projects and strategic partnerships with junior miners position it to capitalize on production ramp-ups. For instance, Gold Royalty Corp's Borborema mine transitioned to commercial production in Q3 2025, a model TFPM could replicate. Yet, overreliance on a few key assets or partners could introduce volatility if those projects underperform.

Balancing Risks and Rewards

While TFPM's valuation and growth metrics are compelling, investors must consider risks. A prolonged decline in gold prices could erode margins, as streaming/royalty firms derive revenue from a percentage of gold sold at market prices. Additionally, the sector's high PE ratio (35.5x for TFPM) leaves it vulnerable to earnings shortfalls.

Conversely, the sector's structural advantages-high margins, diversification across projects, and insulation from operational costs-mitigate many traditional mining risks. Analysts project TFPM to grow revenue at a 6.8% annual rate over the next three years, a pace achievable given the sector's tailwinds.

Conclusion: A Buy, But With Caution

Triple Flag Precious Metals remains a compelling investment for those comfortable with its valuation premium and the sector's macroeconomic tailwinds. Its strong EBITDA growth, strategic positioning in the gold streaming/royalty space, and analyst optimism justify the current price target. However, the stock's 120.74% return in a single year necessitates a disciplined approach. Investors should monitor gold prices, TFPM's acquisition pipeline, and sector-wide EBITDA trends to ensure the premium remains justified. For now, the combination of sector strength and TFPM's operational execution supports a "buy" rating, albeit with a watchful eye on valuation realism.