Financial Contrast: Fortuna Silver Mines (FSM) and Pan American Silver (PAAS)

Fortuna Silver Mines (NYSE:FSM) and Pan American Silver (NASDAQ:PAAS) are both basic materials companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, profitability, risk, valuation and analyst recommendations.

Analyst Ratings

This is a breakdown of current recommendations for Fortuna Silver Mines and Pan American Silver, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fortuna Silver Mines 0 0 0 0 N/A
Pan American Silver 1 3 3 0 2.29

Pan American Silver has a consensus target price of $18.39, suggesting a potential upside of 32.90%. Given Pan American Silver’s higher possible upside, analysts plainly believe Pan American Silver is more favorable than Fortuna Silver Mines.

Dividends

Pan American Silver pays an annual dividend of $0.14 per share and has a dividend yield of 1.0%. Fortuna Silver Mines does not pay a dividend. Pan American Silver pays out 27.5% of its earnings in the form of a dividend.

Profitability

This table compares Fortuna Silver Mines and Pan American Silver’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fortuna Silver Mines 23.63% 7.24% 5.87%
Pan American Silver 14.75% 5.15% 4.02%

Valuation and Earnings

This table compares Fortuna Silver Mines and Pan American Silver’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Fortuna Silver Mines $268.11 million 1.97 $66.30 million $0.31 10.68
Pan American Silver $816.83 million 2.60 $120.99 million $0.51 27.14

Pan American Silver has higher revenue and earnings than Fortuna Silver Mines. Fortuna Silver Mines is trading at a lower price-to-earnings ratio than Pan American Silver, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

45.3% of Fortuna Silver Mines shares are owned by institutional investors. Comparatively, 51.3% of Pan American Silver shares are owned by institutional investors. 12.9% of Pan American Silver shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Volatility & Risk

Fortuna Silver Mines has a beta of 0.27, indicating that its share price is 73% less volatile than the S&P 500. Comparatively, Pan American Silver has a beta of 0.18, indicating that its share price is 82% less volatile than the S&P 500.

Summary

Pan American Silver beats Fortuna Silver Mines on 10 of the 15 factors compared between the two stocks.

Fortuna Silver Mines Company Profile

Fortuna Silver Mines Inc. engages in the exploration, extraction, and processing of precious and base metal deposits in Latin America. It explores for silver, gold, lead, and zinc deposits. The company holds interests in the Caylloma mine located in southern Peru; and the San Jose mine situated in the state of Oaxaca in southern Mexico. It also develops the Lindero gold project located in northern Argentina. The company was formerly known as Fortuna Ventures Inc. and changed its name to Fortuna Silver Mines Inc. in June 2005. Fortuna Silver Mines Inc. was incorporated in 1990 and is based in Vancouver, Canada.

Pan American Silver Company Profile

Pan American Silver Corp., together with its subsidiaries, engages in exploration, extraction, processing, refining, and reclamation of silver mines. The company owns and operates silver mines located in Peru, Mexico, Argentina, and Bolivia. It also produces and sells gold, zinc, lead, and copper. The company holds interests in the La Colorada, Dolores, Alamo Dorado, Huaron, Morococha, Manantial Espejo, and San Vicente mines. Pan American Silver Corp. was founded in 1979 and is headquartered in Vancouver, Canada.

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