Critical Analysis: Entrée Resources (OTCMKTS:ERLFF) & Sandstorm Gold (NYSE:SAND)

Sandstorm Gold (NYSE:SAND) and Entrée Resources (OTCMKTS:ERLFF) are both small-cap basic materials companies, but which is the superior stock? We will compare the two businesses based on the strength of their risk, institutional ownership, earnings, dividends, analyst recommendations, valuation and profitability.

Risk & Volatility

Sandstorm Gold has a beta of 1.13, indicating that its stock price is 13% more volatile than the S&P 500. Comparatively, Entrée Resources has a beta of 1.12, indicating that its stock price is 12% more volatile than the S&P 500.

Profitability

This table compares Sandstorm Gold and Entrée Resources’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sandstorm Gold	12.24%	1.52%	1.14%
Entrée Resources	N/A	N/A	-145.18%

Insider and Institutional Ownership

52.0% of Sandstorm Gold shares are held by institutional investors. 1.5% of Sandstorm Gold shares are held by company insiders. Comparatively, 3.4% of Entrée Resources shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Sandstorm Gold and Entrée Resources’ top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sandstorm Gold	$106.58 million	15.71	$41.72 million	$0.08	70.38
Entrée Resources	N/A	N/A	-$9.58 million	($0.05)	-21.40

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

Analyst Ratings

This is a summary of current ratings and price targets for Sandstorm Gold and Entrée Resources, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sandstorm Gold	0	2	2	0	2.50
Entrée Resources	0	0	0	0	N/A

Sandstorm Gold presently has a consensus price target of $10.79, indicating a potential upside of 91.68%. Given Sandstorm Gold’s higher probable upside, analysts plainly believe Sandstorm Gold is more favorable than Entrée Resources.

Summary

Sandstorm Gold beats Entrée Resources on 11 of the 12 factors compared between the two stocks.

About Sandstorm Gold

Sandstorm Gold Ltd. operates as a gold royalty company. The company focuses on acquiring royalties and gold and other metals purchase agreements from companies that have advanced stage operating mines. It offers upfront payments for companies to acquire a stream and receives the right to purchase a percentage of a mine's production for the life of the mine. The company has a portfolio of 243 streams and royalties. It primarily has operations in Canada, Mexico, the United States, Mongolia, Burkina Faso, Ecuador, South Africa, Ghana, Botswana, Cote D'Ivoire, Argentina, Brazil, Chile, Peru, Egypt, Ethiopia, Guyana, Paraguay, French Guiana, Turkey, Sweden, Fiji, and Australia. The company was formerly known as Sandstorm Resources Ltd. and changed its name to Sandstorm Gold Ltd. in February 2011. Sandstorm Gold Ltd. was incorporated in 2007 and is headquartered in Vancouver, Canada.

About Entrée Resources

Entrée Resources Ltd., a mining company, engages in the exploration, evaluation, and development of mineral property interests in Canada. Its principal asset is the Entrée/Oyu Tolgoi joint venture property comprising Hugo North Extension copper-gold deposit and the Heruga copper-gold-molybdenum deposit located in Mongolia. The company was formerly known as Entrée Gold Inc. and changed its name to Entrée Resources Ltd. in May 2017. Entrée Resources Ltd. was incorporated in 1995 and is headquartered in Vancouver, Canada.