Royal Gold (NASDAQ: RGLD) and Buenaventura Mining (NYSE:BVN) are both mid-cap basic materials companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, earnings, risk, profitability, analyst recommendations, institutional ownership and dividends.

Valuation & Earnings

This table compares Royal Gold and Buenaventura Mining’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Royal Gold $439.05 million 12.97 $305.58 million $1.56 55.99
Buenaventura Mining $1.09 billion 3.48 $290.92 million ($1.44) -8.56

Royal Gold has higher revenue, but lower earnings than Buenaventura Mining. Buenaventura Mining is trading at a lower price-to-earnings ratio than Royal Gold, indicating that it is currently the more affordable of the two stocks.

Profitability

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

Net Margins Return on Equity Return on Assets
Royal Gold 23.03% 4.19% 3.09%
Buenaventura Mining -33.54% -11.01% -7.92%

Risk and Volatility

Royal Gold has a beta of 0.68, meaning that its share price is 32% less volatile than the S&P 500. Comparatively, Buenaventura Mining has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.

Dividends

Royal Gold pays an annual dividend of $0.96 per share and has a dividend yield of 1.1%. Buenaventura Mining pays an annual dividend of $0.08 per share and has a dividend yield of 0.6%. Royal Gold pays out 61.5% of its earnings in the form of a dividend. Buenaventura Mining pays out -5.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Buenaventura Mining has increased its dividend for 12 consecutive years.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Royal Gold and Buenaventura Mining, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Royal Gold 0 6 6 0 2.50
Buenaventura Mining 0 1 1 0 2.50

Royal Gold presently has a consensus price target of $92.35, suggesting a potential upside of 5.74%. Buenaventura Mining has a consensus price target of $15.10, suggesting a potential upside of 22.47%. Given Buenaventura Mining’s higher probable upside, analysts clearly believe Buenaventura Mining is more favorable than Royal Gold.

Institutional & Insider Ownership

70.9% of Royal Gold shares are held by institutional investors. Comparatively, 49.3% of Buenaventura Mining shares are held by institutional investors. 1.4% of Royal Gold shares are held by insiders. Comparatively, 19.3% of Buenaventura Mining shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Summary

Royal Gold beats Buenaventura Mining on 9 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.

Buenaventura Mining Company Profile

Compania de Minas Buenaventura S.A.A. (Buenaventura) is a precious metals company. The Company is engaged in the exploration, mining and processing of gold, silver and other metals in Peru. The Company’s segments include Production and sale of minerals; Exploration and development activities; Construction and engineering services; Energy generation and transmission services; Insurance brokerage; Rental of mining concessions; Holding of investment in shares (mainly in Minera Yanacocha S.R.L. and S.M.R.L. Chaupiloma Dos de Cajamarca), and Industrial activities. The Company operates the Orcopampa, Uchucchacua, Julcani, Mallay and Breapampa mines and has controlling interests in over three other mining companies, which operate the Colquijirca-Marcapunta, Tantahuatay and La Zanja mines. It also owns an electric power transmission company, a hydroelectric plant, a processing plant and an engineering services consulting company and non-controlling interests in various other mining companies.

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