Royal Gold (NASDAQ: RGLD) and Eldorado Gold Corporation (NYSE:EGO) are both basic materials companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, analyst recommendations, risk, institutional ownership, dividends, valuation and earnings.

Volatility & Risk

Royal Gold has a beta of 0.68, suggesting that its share price is 32% less volatile than the S&P 500. Comparatively, Eldorado Gold Corporation has a beta of 1.35, suggesting that its share price is 35% more volatile than the S&P 500.

Profitability

This table compares Royal Gold and Eldorado Gold Corporation’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%
Eldorado Gold Corporation 1.00% 1.41% 1.04%

Insider and Institutional Ownership

70.9% of Royal Gold shares are held by institutional investors. Comparatively, 49.5% of Eldorado Gold Corporation shares are held by institutional investors. 1.4% of Royal Gold shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

Royal Gold pays an annual dividend of $0.96 per share and has a dividend yield of 1.1%. Eldorado Gold Corporation does not pay a dividend. Royal Gold pays out 61.5% of its earnings in the form of a dividend. Royal Gold has raised its dividend for 12 consecutive years.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Royal Gold $439.05 million 12.84 $305.58 million $1.56 55.29
Eldorado Gold Corporation $425.59 million 3.19 $143.89 million $0.01 190.19

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

Analyst Recommendations

This is a breakdown of current ratings and price targets for Royal Gold and Eldorado Gold Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Royal Gold 0 6 6 0 2.50
Eldorado Gold Corporation 2 5 2 0 2.00

Royal Gold presently has a consensus price target of $92.35, indicating a potential upside of 7.07%. Eldorado Gold Corporation has a consensus price target of $4.80, indicating a potential upside of 152.63%. Given Eldorado Gold Corporation’s higher possible upside, analysts plainly believe Eldorado Gold Corporation is more favorable than Royal Gold.

Summary

Royal Gold beats Eldorado Gold Corporation on 14 of the 17 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.

Eldorado Gold Corporation Company Profile

Eldorado Gold Corporation (Eldorado) is a gold exploration, development and mining company. The Company’s geographical segments include Turkey, Brazil, Greece, Romania and Other. The Turkey segment includes the Kisladag and the Efemcukuru mines and exploration activities in Turkey. The Brazil segment includes the Vila Nova mine, Tocantinzinho project and exploration activities in Brazil. The Greece segment includes the Stratoni mine, the Olympias, Skouries, Perama Hill and Sapes projects, and exploration activities in Greece. The Romania segment includes the Certej project and exploration activities in Romania. Other segment includes operations of the Company’s corporate office and exploration activities in other countries. The Company has operations and ongoing exploration and development projects in Turkey, Greece, Brazil and Romania. Its Operating gold mines include Kisladag in Turkey, and Efemcukuru in Turkey.

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