Franco-Nevada Corporation (NYSE: FNV) and Harmony Gold Mining Company Limited (NYSE:HMY) are both basic materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, analyst recommendations, profitability, valuation, dividends, institutional ownership and earnings.

Institutional and Insider Ownership

60.3% of Franco-Nevada Corporation shares are held by institutional investors. Comparatively, 25.1% of Harmony Gold Mining Company Limited shares are held by institutional investors. 16.0% of Harmony Gold Mining Company Limited shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations for Franco-Nevada Corporation and Harmony Gold Mining Company Limited, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Franco-Nevada Corporation 0 7 7 0 2.50
Harmony Gold Mining Company Limited 2 3 0 0 1.60

Franco-Nevada Corporation currently has a consensus target price of $79.85, suggesting a potential downside of 2.37%. Given Franco-Nevada Corporation’s stronger consensus rating and higher possible upside, research analysts clearly believe Franco-Nevada Corporation is more favorable than Harmony Gold Mining Company Limited.

Volatility & Risk

Franco-Nevada Corporation has a beta of -0.03, suggesting that its share price is 103% less volatile than the S&P 500. Comparatively, Harmony Gold Mining Company Limited has a beta of -1.95, suggesting that its share price is 295% less volatile than the S&P 500.

Dividends

Franco-Nevada Corporation pays an annual dividend of $0.92 per share and has a dividend yield of 1.1%. Harmony Gold Mining Company Limited pays an annual dividend of $0.07 per share and has a dividend yield of 3.7%. Franco-Nevada Corporation pays out 119.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Harmony Gold Mining Company Limited has increased its dividend for 4 consecutive years. Harmony Gold Mining Company Limited is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Franco-Nevada Corporation and Harmony Gold Mining Company Limited’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Franco-Nevada Corporation 21.26% 4.39% 4.31%
Harmony Gold Mining Company Limited N/A N/A N/A

Earnings and Valuation

This table compares Franco-Nevada Corporation and Harmony Gold Mining Company Limited’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Franco-Nevada Corporation $663.10 million 22.88 $511.30 million $0.77 106.22
Harmony Gold Mining Company Limited $1.43 billion 0.58 $308.16 million N/A N/A

Franco-Nevada Corporation has higher revenue, but lower earnings than Harmony Gold Mining Company Limited.

Summary

Franco-Nevada Corporation beats Harmony Gold Mining Company Limited on 11 of the 16 factors compared between the two stocks.

About Franco-Nevada Corporation

Franco-Nevada Corporation (Franco-Nevada) is a gold-focused royalty and stream company. The Company has interests in silver, platinum group metals, oil and gas and other resource assets. The Company is engaged in resource sector royalty/stream acquisitions and management activities. It has a portfolio of properties in the United States, Canada, Mexico, Peru, Chile and Africa. Its properties in the United States include Goldstrike, Stillwater, Gold Quarry, Marigold, Fire Creek/Midas, Bald Mountain, South Arturo and Other. Its properties in Canada include Sudbury, Detour Lake, Golden Highway, Musselwhite, Hemlo, Kirkland Lake, Timmins West, Canadian Malartic and Other. Its properties in Latin America include Antapaccay, Antamina, Candelaria, Guadalupe-Palmarejo and Other. Its properties in Rest of World include Mine Waste Solutions (MWS), Sabodala, Subika, Tasiast, Karma, Duketon, Edikan and Other.

About Harmony Gold Mining Company Limited

Harmony Gold Mining Company Limited, through its subsidiaries, is engaged in gold mining and related activities, including exploration, extraction and processing. The Company’s segments include South Africa Underground, Surface, and International. The South Africa Underground segment includes Kusasalethu, Doornkop, Phakisa, Tshepong, Masimong, Target 1, Bambanani, Joel, Unisel and Target 3. The Surface segment comprises the Company’s other surface operations. The Company’s International segment comprises Hidden Valley Project. The Company has operations in South Africa and Papua New Guinea (PNG). The Company’s principal product is the Gold bullion. The Company’s exploration projects include Golpu project and Kili Teke prospect. The Company has approximately nine underground mines, one open pit operation and several surface sources in South Africa. The Company’s subsidiaries include Lydenburg Exploration Limited, Tswelopele Beneficiation Operation (TBO) and Harmony Copper Limited.

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