Analyzing Vedanta (VEDL) and Ferroglobe (GSM)

Vedanta (NYSE: VEDL) and Ferroglobe (NASDAQ:GSM) are both basic materials companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, valuation, dividends, profitability, institutional ownership, risk and analyst recommendations.

Risk & Volatility

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Vedanta has a beta of 1.89, indicating that its stock price is 89% more volatile than the S&P 500. Comparatively, Ferroglobe has a beta of 1.62, indicating that its stock price is 62% more volatile than the S&P 500.

Profitability

This table compares Vedanta and Ferroglobe’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Vedanta 7.87% 19.51% 7.94%
Ferroglobe 1.45% 2.32% 1.02%

Insider & Institutional Ownership

4.5% of Vedanta shares are owned by institutional investors. Comparatively, 41.2% of Ferroglobe shares are owned by institutional investors. 13.1% of Ferroglobe shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

Vedanta pays an annual dividend of $7.71 per share and has a dividend yield of 43.2%. Ferroglobe does not pay a dividend.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Vedanta and Ferroglobe, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Vedanta 1 0 2 0 2.33
Ferroglobe 0 0 5 0 3.00

Ferroglobe has a consensus price target of $20.50, indicating a potential upside of 82.06%. Given Ferroglobe’s stronger consensus rating and higher probable upside, analysts clearly believe Ferroglobe is more favorable than Vedanta.

Earnings and Valuation

This table compares Vedanta and Ferroglobe’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Vedanta $10.68 billion 1.24 $848.60 million N/A N/A
Ferroglobe $1.74 billion 1.11 $25.17 million $0.13 86.62

Vedanta has higher revenue and earnings than Ferroglobe.

Summary

Vedanta beats Ferroglobe on 8 of the 14 factors compared between the two stocks.

About Vedanta

Vedanta Limited, a diversified natural resources company, engages in exploring, extracting, and processing minerals, and oil and gas in India. It produces oil and gas, zinc, lead, silver, copper, iron ore, and aluminum. The company also operates 600 megawatts of thermal coal based power facility in the State of Odisha; and 274 megawatts of wind power plants. In addition, it engages in the mechanization of coal handling facilities; and upgradation of general cargo berth for handling coal at the outer harbor of Vishakapatnam Port on the east coast of India. The company was formerly known as Sesa Sterlite Limited and changed its name to Vedanta Limited in March 2015. The company was incorporated in 1965 and is based in Mumbai, India. Vedanta Limited is a subsidiary of Vedanta Resources Plc.

About Ferroglobe

Ferroglobe PLC operates in the silicon and specialty metals industry in the United States, Europe, and internationally. The company offers silicon metals that are used in personal care items, construction-related products, health care products, and electronics, as well as used in the manufacture of silicone chemicals; silicomanganese, which is used as deoxidizing agent in the steel manufacturing process; and ferromanganese that is used as a deoxidizing, desulphurizing, and degassing agent in the removal of nitrogen and other harmful elements from steel. It also provides ferrosilicon products that are used to produce stainless steel, carbon steel, and various other steel alloys, as well as to manufacture electrodes and aluminum; silico calcium, which is used in the deoxidation and desulfurization of liquid steel, and production of coatings for cast iron pipes, as well as in the welding process of powder metal; nodularizers and inoculants, which are used in the production of iron; and silica fume, a by-product of the electrometallurgical process of silicon metal and ferrosilicon. In addition, the company operates quartz mines located in Spain, South Africa, the United States, and Canada; and low-ash and metallurgical coal mines in the United States. It serves silicone chemical, aluminum, and steel manufacturers; auto companies and their suppliers; ductile iron foundries; manufacturers of photovoltaic solar cells and computer chips; and concrete producers. The company was formerly known as VeloNewco Limited. Ferroglobe PLC was incorporated in 2015 and is headquartered in London, the United Kingdom. Ferroglobe PLC is a subsidiary of Grupo Villar Mir, S.A.

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