Royal Gold (NASDAQ: RGLD) and Sandstorm Gold (NASDAQ:SAND) are both basic materials companies, but which is the superior stock? We will compare the two businesses based on the strength of their risk, earnings, profitabiliy, institutional ownership, dividends, analyst recommendations and valuation.

Valuation and Earnings

This table compares Royal Gold and Sandstorm Gold’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Royal Gold $424.25 million 13.01 $295.02 million $1.57 53.80
Sandstorm Gold $67.81 million 9.03 $43.99 million N/A N/A

Royal Gold has higher revenue and earnings than Sandstorm Gold.

Dividends

Royal Gold pays an annual dividend of $0.96 per share and has a dividend yield of 1.1%. Sandstorm Gold does not pay a dividend. Royal Gold pays out 61.1% of its earnings in the form of a dividend. Royal Gold has raised its dividend for 12 consecutive years.

Profitability

This table compares Royal Gold and Sandstorm Gold’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Royal Gold 23.93% 4.22% 3.11%
Sandstorm Gold N/A N/A N/A

Institutional & Insider Ownership

70.6% of Royal Gold shares are owned by institutional investors. 1.4% of Royal Gold shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of recent recommendations for Royal Gold and Sandstorm Gold, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Royal Gold 0 5 7 0 2.58
Sandstorm Gold 0 1 5 0 2.83

Royal Gold currently has a consensus price target of $89.95, suggesting a potential upside of 6.49%. Sandstorm Gold has a consensus price target of $7.63, suggesting a potential upside of 89.21%. Given Sandstorm Gold’s stronger consensus rating and higher probable upside, analysts plainly believe Sandstorm Gold is more favorable than Royal Gold.

Summary

Royal Gold beats Sandstorm Gold on 12 of the 15 factors compared between the two stocks.

Royal Gold Company Profile

Royal Gold, Inc., together with its subsidiaries, is engaged in acquiring and managing precious metal streams, royalties and similar interests. The Company operates through two segments: Acquisition and Management of Stream Interests, and Acquisition and Management of Royalty Interests. Its assets are located in Canada, Chile, Dominican Republic, Mexico, the United States, Africa, Australia and Other. As of June 30, 2016, the Company owned stream interests on four producing properties and three development-stage properties. It has investments in stream interests relating to Pueblo Viejo, Andacollo, Wassa and Prestea, and Rainy River. As of June 30, 2016, the Company owned royalty interests on 34 producing properties, 21 development-stage properties and 131 exploration-stage properties, of which it considered 50 to be evaluation-stage projects.

Sandstorm Gold Company Profile

Sandstorm Gold Ltd is a Canada-based company engaged in providing financing to mining companies. The Company focuses on acquiring gold and other metal purchase agreements (Gold Streams or Silver Streams), and royalties from companies that have advanced stage development projects or operating mines. The Company operates in the segments of Bachelor Lake, Black Fox, Chapada Santa Elena, Yamana Silver Stream, Chapada, Diavik Mine, Other Royalties, Other and Corporate. The Company has acquired a portfolio of approximately 140 streams and royalties, of which approximately 20 of the underlying mines are producing. The Company’s projects include Yamana Silver Stream; Cerro Moro, which is located approximately 70 kilometers southwest of the coastal port city of Puerto Deseado; Chapada Mine, which is located 270 kilometers northwest of Brasilia in Goias state, Brazil; Black Fox Mine; Santa Elena Mine; Bachelor Lake Mine; Karma Mine; Ming Mine, Bracemac-McLeod Mine and Aurizona Mine.

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