Financial Contrast: Nexa Resources (NYSE:NEXA) vs. Wheaton Precious Metals (NYSE:WPM)

Nexa Resources (NYSE:NEXA) and Wheaton Precious Metals (NYSE:WPM) are both basic materials companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, valuation, profitability, risk, dividends and earnings.

Institutional & Insider Ownership

70.3% of Wheaton Precious Metals shares are owned by institutional investors. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Nexa Resources and Wheaton Precious Metals’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Nexa Resources	-0.57%	-8.80%	-2.08%
Wheaton Precious Metals	54.72%	13.32%	12.89%

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Nexa Resources and Wheaton Precious Metals, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Nexa Resources	2	6	0	0	1.75
Wheaton Precious Metals	0	1	10	1	3.00

Nexa Resources presently has a consensus target price of $7.74, suggesting a potential downside of 30.49%. Wheaton Precious Metals has a consensus target price of $140.44, suggesting a potential downside of 1.20%. Given Wheaton Precious Metals’ stronger consensus rating and higher possible upside, analysts clearly believe Wheaton Precious Metals is more favorable than Nexa Resources.

Earnings and Valuation

This table compares Nexa Resources and Wheaton Precious Metals”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Nexa Resources	$2.77 billion	N/A	-$205.03 million	($0.12)	-92.83
Wheaton Precious Metals	$1.28 billion	50.24	$529.14 million	$2.20	64.61

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

Risk and Volatility

Nexa Resources has a beta of 0.55, suggesting that its share price is 45% less volatile than the S&P 500. Comparatively, Wheaton Precious Metals has a beta of 0.52, suggesting that its share price is 48% less volatile than the S&P 500.

Dividends

Nexa Resources pays an annual dividend of $0.10 per share and has a dividend yield of 0.9%. Wheaton Precious Metals pays an annual dividend of $0.66 per share and has a dividend yield of 0.5%. Nexa Resources pays out -83.3% of its earnings in the form of a dividend. Wheaton Precious Metals pays out 30.0% 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. Wheaton Precious Metals has increased its dividend for 2 consecutive years. Nexa Resources is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Wheaton Precious Metals beats Nexa Resources on 12 of the 16 factors compared between the two stocks.

About Nexa Resources

Nexa Resources S.A., together with its subsidiaries, engages in the zinc mining and smelting business worldwide. The company operates in two segments, Mining and Smelting. It produces zinc, zamac, zinc oxide, and zincal, as well as by-products, such as copper, lead, silver, gold, copper sulfate, sulfuric acid, copper cementum, silver concentrate, slag aggregates, and cadmium/sponge deposits. The company owns and operates six polymetallic mines, including three located in the Central Andes of Peru; two located in the State of Minas Gerais in Brazil; and one located in the State of Mato Grosso in Brazil. It also owns and operates three zinc smelters comprising one located in Cajamarquilla in Peru; and two located in the State of Minas Gerais in Brazil, which recovers and produces metallic zinc, zinc oxide, and by-products, such as sulfuric acid. The company also exports its products. Its products are used in civil construction, transportation, energy, agriculture, health, and consumer goods industries. 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, Luxembourg. Nexa Resources S.A. operates as a subsidiary of Votorantim S.A.

About Wheaton Precious Metals

Wheaton Precious Metals Corp. primarily sells precious metals in North America, Europe, and South America. It produces and sells gold, silver, palladium, and cobalt deposits. The company was formerly known as Silver Wheaton Corp. and changed its name to Wheaton Precious Metals Corp. in May 2017. Wheaton Precious Metals Corp. was founded in 2004 and is headquartered in Vancouver, Canada.