Critical Survey: Lundin Mining (OTCMKTS:LUNMF) versus OR Royalties (NYSE:OR)

OR Royalties (NYSE:OR) and Lundin Mining (OTCMKTS:LUNMF) are both materials companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, dividends, profitability, earnings, analyst recommendations, risk and institutional ownership.

Insider & Institutional Ownership

68.5% of OR Royalties shares are held by institutional investors. Comparatively, 0.1% of Lundin Mining shares are held by institutional investors. 0.6% of OR Royalties shares are held by company insiders. Comparatively, 0.4% of Lundin Mining 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.

Volatility & Risk

OR Royalties has a beta of 0.78, suggesting that its share price is 22% less volatile than the S&P 500. Comparatively, Lundin Mining has a beta of 1.27, suggesting that its share price is 27% more volatile than the S&P 500.

Dividends

OR Royalties pays an annual dividend of $0.26 per share and has a dividend yield of 0.8%. Lundin Mining pays an annual dividend of $0.08 per share and has a dividend yield of 0.3%. OR Royalties pays out 17.3% of its earnings in the form of a dividend. Lundin Mining pays out 4.6% 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. OR Royalties has raised its dividend for 1 consecutive years. OR Royalties is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares OR Royalties and Lundin Mining’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
OR Royalties	78.04%	16.41%	14.51%
Lundin Mining	31.82%	13.18%	9.73%

Analyst Ratings

This is a summary of recent ratings and recommmendations for OR Royalties and Lundin Mining, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
OR Royalties	0	5	3	1	2.56
Lundin Mining	0	8	4	0	2.33

OR Royalties currently has a consensus price target of $41.00, suggesting a potential upside of 18.93%. Given OR Royalties’ stronger consensus rating and higher probable upside, analysts clearly believe OR Royalties is more favorable than Lundin Mining.

Valuation and Earnings

This table compares OR Royalties and Lundin Mining”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
OR Royalties	$362.74 million	17.71	$206.09 million	$1.50	22.98
Lundin Mining	$4.05 billion	5.15	$1.28 billion	$1.73	14.17

Lundin Mining has higher revenue and earnings than OR Royalties. Lundin Mining is trading at a lower price-to-earnings ratio than OR Royalties, indicating that it is currently the more affordable of the two stocks.

Summary

OR Royalties beats Lundin Mining on 12 of the 18 factors compared between the two stocks.

About OR Royalties

Osisko Gold Royalties Ltd acquires and manages precious metal and other royalties, streams, and other interests in Canada and internationally. It also owns options on offtake; royalty/stream financings; and exclusive rights to participate in future royalty/stream financings on various projects. The company’s primary asset is a 3-5% net smelter return royalty on the Canadian Malartic complex located in Canada. In addition, it is involved in the exploration, evaluation, and development of mining projects. It primarily explores for precious metals, including gold, silver, diamond, and others. Osisko Gold Royalties Ltd was founded in 2014 and is headquartered in Montreal, Canada.

About Lundin Mining

Lundin Mining Corporation, a diversified base metals mining company, engages in the exploration, development, and mining of mineral properties in Chile, Brazil, the United States, Portugal, Sweden, and Argentina. It primarily produces copper, zinc, gold, nickel, and molybdenum, as well as lead, silver, and other metals. The company holds 100% interests in the Chapada mine located in Brazil; the Eagle mine located in the United States; the Neves-Corvo mine located in Portugal; and the Zinkgruvan mine located in Sweden. It also holds 80% interests in the Candelaria and Ojos del Salado mining complex; and 51% interest in the Caserones copper-molybdenum mine located in Chile, as well as owns the copper gold Josemaria project located in Argentina. The company was formerly known as South Atlantic Ventures Ltd. and changed its name to Lundin Mining Corporation in August 2004. Lundin Mining Corporation was incorporated in 1994 and is headquartered in Vancouver, Canada.