Financial Contrast: BHP Billiton (BHP) vs. Fortuna Silver Mines (FSM)

BHP Billiton (NYSE: BHP) and Fortuna Silver Mines (NYSE:FSM) are both basic materials companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, earnings, dividends, risk, profitability, analyst recommendations and institutional ownership.

Profitability

This table compares BHP Billiton and Fortuna Silver Mines’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
BHP Billiton N/A N/A N/A
Fortuna Silver Mines 15.44% 9.15% 7.26%

Analyst Recommendations

This is a breakdown of recent recommendations for BHP Billiton and Fortuna Silver Mines, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BHP Billiton 5 4 5 0 2.00
Fortuna Silver Mines 0 1 4 0 2.80

BHP Billiton currently has a consensus target price of $36.38, indicating a potential downside of 14.12%. Fortuna Silver Mines has a consensus target price of $7.50, indicating a potential upside of 54.00%. Given Fortuna Silver Mines’ stronger consensus rating and higher possible upside, analysts plainly believe Fortuna Silver Mines is more favorable than BHP Billiton.

Insider & Institutional Ownership

3.3% of BHP Billiton shares are held by institutional investors. Comparatively, 39.6% of Fortuna Silver Mines shares are held by institutional investors. 0.0% of BHP Billiton shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares BHP Billiton and Fortuna Silver Mines’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
BHP Billiton $38.29 billion 1.78 $5.89 billion N/A N/A
Fortuna Silver Mines $210.30 million 3.70 $17.85 million $0.24 20.29

BHP Billiton has higher revenue and earnings than Fortuna Silver Mines.

Dividends

BHP Billiton pays an annual dividend of $1.72 per share and has a dividend yield of 4.1%. Fortuna Silver Mines does not pay a dividend.

Risk & Volatility

BHP Billiton has a beta of 1.14, suggesting that its stock price is 14% more volatile than the S&P 500. Comparatively, Fortuna Silver Mines has a beta of 0.14, suggesting that its stock price is 86% less volatile than the S&P 500.

Summary

Fortuna Silver Mines beats BHP Billiton on 7 of the 13 factors compared between the two stocks.

About BHP Billiton

BHP Billiton Limited is a global resources company. The Company is a producer of various commodities, including iron ore, metallurgical coal, copper and uranium. Its segments include Petroleum, Copper, Iron Ore and Coal. The Petroleum segment is engaged in the exploration, development and production of oil and gas. The Copper segment is engaged in mining of copper, silver, lead, zinc, molybdenum, uranium and gold. The Iron Ore segment is engaged in mining of iron ore. The Coal segment is engaged in mining of metallurgical coal and thermal (energy) coal. Its businesses include Minerals Australia, Minerals Americas, Petroleum and Marketing. The Company extracts and processes minerals, oil and gas from its production operations located primarily in Australia and the Americas. The Company manages product distribution through its global logistics chain, including freight and pipeline transportation. Its businesses include Minerals Australia, Minerals Americas, Petroleum and Marketing.

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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