Analyzing Nexa Resources (NEXA) and Hudbay Minerals (HBM)

Nexa Resources (NYSE:NEXA) and Hudbay Minerals (NYSE:HBM) are both small-cap basic materials companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, risk, analyst recommendations, profitability, dividends, earnings and valuation.

Insider & Institutional Ownership

11.5% of Nexa Resources shares are owned by institutional investors. Comparatively, 58.1% of Hudbay Minerals shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Nexa Resources and Hudbay Minerals’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Nexa Resources $2.45 billion 0.67 $126.88 million $1.42 8.61
Hudbay Minerals $1.36 billion 0.90 $163.89 million $0.57 8.21

Hudbay Minerals has lower revenue, but higher earnings than Nexa Resources. Hudbay Minerals 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

Nexa Resources pays an annual dividend of $0.47 per share and has a dividend yield of 3.8%. Hudbay Minerals pays an annual dividend of $0.02 per share and has a dividend yield of 0.4%. Nexa Resources pays out 33.1% of its earnings in the form of a dividend. Hudbay Minerals pays out 3.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Profitability

This table compares Nexa Resources and Hudbay Minerals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Nexa Resources 4.47% 4.21% 2.05%
Hudbay Minerals 13.40% 8.66% 3.96%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Nexa Resources and Hudbay Minerals, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nexa Resources 1 0 6 0 2.71
Hudbay Minerals 0 3 5 0 2.63

Nexa Resources presently has a consensus price target of $22.52, indicating a potential upside of 84.11%. Hudbay Minerals has a consensus price target of $7.00, indicating a potential upside of 49.57%. Given Nexa Resources’ stronger consensus rating and higher possible upside, equities analysts clearly believe Nexa Resources is more favorable than Hudbay Minerals.

Nexa Resources Company Profile

Nexa Resources S.A., through its subsidiaries, engages in the zinc mining and smelting business in Latin America. It also produces copper, lead, silver and gold deposits. The company owns and operates five mines, including three located in the Central Andes of Peru; and two located in the state of Minas Gerais in Brazil. In addition, it refines byproducts, such as sulfuric acid, silver concentrate, copper cement, and copper sulfate. Nexa Resources S.A. also exports its products. The company was formerly known as VM Holding S.A. and changed its name to Nexa Resources S.A. in September 2017. The company was founded in 1956 and is based in Luxembourg City, Luxembourg. Nexa Resources S.A. is a subsidiary of Votorantim S.A.

Hudbay Minerals Company Profile

Hudbay Minerals Inc., an integrated mining company, together with its subsidiaries, focuses on the discovery, production, and marketing of base and precious metals in North and South America. It produces copper concentrates containing copper, gold, and silver; and zinc metal. The company owns four polymetallic mines, four ore concentrators, and a zinc production facility in northern Manitoba and Saskatchewan, Canada, as well as in Cusco, Peru; and a copper project in Arizona, the United States. HudBay Minerals Inc. was founded in 1927 and is based in Toronto, Canada.

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