Nexa Resources (NYSE: NEXA) and Rio Tinto (NYSE:RIO) are both mid-cap basic materials companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, profitability, institutional ownership, dividends and earnings.

Profitability

This table compares Nexa Resources and Rio Tinto’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Nexa Resources 2.88% 2.16% 1.09%
Rio Tinto N/A N/A N/A

Valuation & Earnings

This table compares Nexa Resources and Rio Tinto’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Nexa Resources $1.91 billion 1.18 $93.16 million $0.58 34.48
Rio Tinto $33.78 billion 2.23 $4.62 billion $3.43 16.22

Rio Tinto has higher revenue and earnings than Nexa Resources. Rio Tinto is trading at a lower price-to-earnings ratio than Nexa Resources, indicating that it is currently the more affordable of the two stocks.

Dividends

Rio Tinto pays an annual dividend of $2.37 per share and has a dividend yield of 4.3%. Nexa Resources does not pay a dividend. Rio Tinto pays out 69.1% of its earnings in the form of a dividend.

Institutional & Insider Ownership

7.2% of Rio Tinto shares are held by institutional investors. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings for Nexa Resources and Rio Tinto, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nexa Resources 0 0 5 0 3.00
Rio Tinto 1 6 8 0 2.47

Nexa Resources presently has a consensus target price of $21.52, suggesting a potential upside of 7.60%. Rio Tinto has a consensus target price of $50.12, suggesting a potential downside of 9.93%. Given Nexa Resources’ stronger consensus rating and higher possible upside, analysts clearly believe Nexa Resources is more favorable than Rio Tinto.

Nexa Resources Company Profile

Nexa Resources SA, formerly VM Holding SA, is a Luxembourg-based company engaged in the mineral resources industry. The Company is a metals and mining entity mainly engaged in zinc content production, and whose product portfolio also includes copper, lead, silver and gold. Its mining and smelting presence is located in Brazil, conducted by Votorantim Metais Zinco SA, and in Peru, conducted by Compania Minera Milpo SAA, and Votorantim Metais-Cajamarquilla SA. Its controlling shareholder is Votorantim SA, a Brazilian privately owned industrial conglomerate that holds ownership interests in metal, steel, cement, energy and pulp companies, among others.

Rio Tinto Company Profile

Rio Tinto plc is a mining and metals company. The Company’s business is finding, mining and processing mineral resources. The Company’s segments include Iron Ore, Aluminium, Copper & Diamonds, Energy & Minerals and Other Operations. The Company operates an iron ore business, supplying the global seaborne iron ore trade. Its Iron Ore product operations are located in the Pilbara region of Western Australia. The Aluminium business includes bauxite mines, alumina refineries and aluminum smelters. Its bauxite mines are located in Australia, Brazil and Guinea. The Copper & Diamonds segment has managed operations in Australia, Canada, Mongolia and the United States, and non-managed operations in Chile and Indonesia. The Energy & Minerals segment consists of mining, refining and marketing operations in over 10 countries, across six sectors: borates, coal, iron ore concentrate and pellets, salt, titanium dioxide and uranium.

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