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

Dividends

Alamos Gold pays an annual dividend of $0.02 per share and has a dividend yield of 0.3%. Royal Gold pays an annual dividend of $0.96 per share and has a dividend yield of 1.1%. Alamos Gold pays out 100.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Royal Gold pays out 62.3% of its earnings in the form of a dividend. Royal Gold has raised its dividend for 12 consecutive years. Royal Gold is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

63.0% of Alamos Gold shares are held by institutional investors. Comparatively, 72.0% of Royal Gold shares are held by institutional investors. 1.1% of Royal Gold shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Alamos Gold 2.08% 1.07% 0.82%
Royal Gold 23.06% 4.12% 3.07%

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Alamos Gold $482.20 million 4.92 -$17.90 million $0.02 305.00
Royal Gold $440.81 million 12.41 $101.53 million $1.54 54.29

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

Analyst Recommendations

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alamos Gold 0 3 2 0 2.40
Royal Gold 0 7 5 0 2.42

Alamos Gold currently has a consensus price target of $10.83, indicating a potential upside of 77.60%. Royal Gold has a consensus price target of $96.56, indicating a potential upside of 15.49%. Given Alamos Gold’s higher possible upside, analysts clearly believe Alamos Gold is more favorable than Royal Gold.

Risk & Volatility

Alamos Gold has a beta of 0.46, suggesting that its stock price is 54% less volatile than the S&P 500. Comparatively, Royal Gold has a beta of 0.46, suggesting that its stock price is 54% less volatile than the S&P 500.

Summary

Royal Gold beats Alamos Gold on 13 of the 16 factors compared between the two stocks.

Alamos Gold Company Profile

Alamos Gold Inc. is a Canada-based mid-tier gold producer. The Company owns and operates the Mulatos Mine, as well as the Esperanza, Agi Dagi, Kirazli and Camyurt gold development projects. The Mulatos mine is located within the 30,536 hectares Salamandra group of concessions in the state of Sonora in northwest Mexico. The Esperanza Gold Project is a development stage asset located in south-central Mexico in the state of Morelos. Agi Dagi and Kirazli gold development projects are located in Canakkale Province on the Biga Peninsula of northwestern Turkey. The Camyurt project is located near southeast of Canakkale, Turkey. In addition, the Company owns a 100% interest in the Quartz Mountain Property, which is located on the northern extension of the prolific Basin and Range Province of Nevada in Oregon.

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.

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