Turquoise Hill Resources (NYSE: TRQ) and Fortuna Silver Mines (NYSE:FSM) are both basic materials companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, profitability, risk, analyst recommendations, dividends, earnings and institutional ownership.

Profitability

This table compares Turquoise Hill Resources and Fortuna Silver Mines’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Turquoise Hill Resources 14.20% 1.60% 1.01%
Fortuna Silver Mines 15.97% 9.08% 7.07%

Earnings and Valuation

This table compares Turquoise Hill Resources and Fortuna Silver Mines’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Turquoise Hill Resources $892.02 million 7.02 $159.41 million $0.06 51.84
Fortuna Silver Mines $251.82 million 2.95 $118.59 million $0.25 18.68

Turquoise Hill Resources has higher revenue and earnings than Fortuna Silver Mines. Fortuna Silver Mines is trading at a lower price-to-earnings ratio than Turquoise Hill Resources, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

32.9% of Turquoise Hill Resources shares are owned by institutional investors. Comparatively, 41.6% of Fortuna Silver Mines shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Risk and Volatility

Turquoise Hill Resources has a beta of 0.4, suggesting that its share price is 60% less volatile than the S&P 500. Comparatively, Fortuna Silver Mines has a beta of 0.22, suggesting that its share price is 78% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Turquoise Hill Resources and Fortuna Silver Mines, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Turquoise Hill Resources 0 3 3 0 2.50
Fortuna Silver Mines 0 1 3 1 3.00

Turquoise Hill Resources presently has a consensus target price of $5.00, indicating a potential upside of 60.77%. Fortuna Silver Mines has a consensus target price of $9.00, indicating a potential upside of 92.72%. Given Fortuna Silver Mines’ stronger consensus rating and higher possible upside, analysts clearly believe Fortuna Silver Mines is more favorable than Turquoise Hill Resources.

Summary

Fortuna Silver Mines beats Turquoise Hill Resources on 8 of the 13 factors compared between the two stocks.

About Turquoise Hill Resources

Turquoise Hill Resources Ltd. is an international mining company. The Company focuses on the operation and further development of the Oyu Tolgoi copper-gold mine in Southern Mongolia, which is the Company’s principal material mineral resource property. The Company’s Oyu Tolgoi mine is held through approximately 65% interest in Oyu Tolgoi LLC (Oyu Tolgoi) and the remaining approximately 35% interest is held by Erdenes Oyu Tolgoi LLC (Erdenes). The Company’s Oyu Tolgoi mine is located approximately 550 kilometers south of Ulaanbaatar, Mongolia’s capital city, and 80 kilometers north of the Mongolia-China border. The Company’s Mineralization on the property consists of porphyry-style copper, gold, silver and molybdenum contained in a linear structural trend (the Oyu Tolgoi Trend) of deposits throughout this trend. They include, from south to north, the Heruga Deposit, the Oyut deposit and the Hugo Dummett deposits (Hugo South, Hugo North and Hugo North Extension).

About Fortuna Silver Mines

Fortuna Silver Mines Inc. is a Canada-based mining company engaged in silver mining and related activities in Latin America, including exploration, extraction and processing. The Company operates the Caylloma silver, lead, and zinc mine (Caylloma) in southern Peru and the San Jose silver and gold mine (San Jose) in southern Mexico. The Company’s segments include Corporate, Bateas and Cuzcatlan. The Company owns interest in the Caylloma mine and related mining concessions located in southern Peru. The Caylloma property is located in the Caylloma Mining District, approximately 220 kilometers north-northwest of Arequipa, Peru. The Company produces approximately 1.7 million ounces of silver and over 1,160 ounces of gold at Caylloma. The Company’s San Jose property, which covers a silver gold bearing epithermal vein system is located in the state of Oaxaca in southern Mexico. The Company produces approximately 4.9 million ounces of silver and over 38,530 ounces of gold at San Jose.

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