Centerra Gold (NYSE:CGAU) and Sandstorm Gold (NYSE:SAND) Critical Contrast

Centerra Gold (NYSE:CGAU – Get Rating) and Sandstorm Gold (NYSE:SAND – Get Rating) are both small-cap basic materials companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, analyst recommendations, earnings, risk, profitability, valuation and institutional ownership.

Institutional & Insider Ownership

51.6% of Centerra Gold shares are held by institutional investors. Comparatively, 55.6% of Sandstorm Gold shares are held by institutional investors. 0.2% of Centerra Gold shares are held by company insiders. Comparatively, 1.5% of Sandstorm Gold shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Risk and Volatility

Centerra Gold has a beta of 0.81, indicating that its stock price is 19% less volatile than the S&P 500. Comparatively, Sandstorm Gold has a beta of 0.94, indicating that its stock price is 6% less volatile than the S&P 500.

Earnings & Valuation

This table compares Centerra Gold and Sandstorm Gold’s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Centerra Gold	$850.19 million	1.63	-$77.21 million	($0.45)	-14.13
Sandstorm Gold	$97.82 million	17.51	$78.36 million	$0.37	15.49

Sandstorm Gold has lower revenue, but higher earnings than Centerra Gold. Centerra Gold is trading at a lower price-to-earnings ratio than Sandstorm Gold, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Centerra Gold and Sandstorm Gold’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Centerra Gold	-9.08%	-0.47%	-0.37%
Sandstorm Gold	52.55%	3.04%	2.35%

Dividends

Centerra Gold pays an annual dividend of $0.21 per share and has a dividend yield of 3.3%. Sandstorm Gold pays an annual dividend of $0.06 per share and has a dividend yield of 1.0%. Centerra Gold pays out -46.7% of its earnings in the form of a dividend. Sandstorm Gold pays out 16.2% 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. Centerra Gold is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Centerra Gold and Sandstorm Gold, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Centerra Gold	0	1	1	0	2.50
Sandstorm Gold	0	0	6	0	3.00

Centerra Gold presently has a consensus target price of $9.42, suggesting a potential upside of 48.06%. Sandstorm Gold has a consensus target price of $9.94, suggesting a potential upside of 73.55%. Given Sandstorm Gold’s stronger consensus rating and higher probable upside, analysts plainly believe Sandstorm Gold is more favorable than Centerra Gold.

Summary

Sandstorm Gold beats Centerra Gold on 13 of the 16 factors compared between the two stocks.

About Centerra Gold

(Get Rating)

Centerra Gold, Inc. engages in the operation, development, exploration and acquisition of gold and copper properties. It operates through the following segments: Kumtor, Mount Milligan, and Öksüt. The company was founded on November 7, 2002 and is headquartered in Toronto, Canada.

About Sandstorm Gold

(Get Rating)

Sandstorm Gold Ltd. engages in the acquisition of gold and other metals purchase agreements and royalties. It operates through the following segments: Aurizona, Black Fox, Bracemac-McLeod, Chapada, Diavik, Fruta del Norte, Hounde, Karma, Relief Canyon, Santa Elena, Vale Royalties, Yamana Silver Stream, Other, and Corporate. The company was founded by Nolan Watson and David I. Awram on March 23, 2007 and is headquartered in Vancouver, Canada.