Royal Gold (NASDAQ: RGLD) and Newmont Mining (NYSE:NEM) are both mid-cap basic materials companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, earnings, analyst recommendations, risk, profitability, dividends and valuation.
Volatility and Risk
Royal Gold has a beta of 0.46, suggesting that its share price is 54% less volatile than the S&P 500. Comparatively, Newmont Mining has a beta of 0.1, suggesting that its share price is 90% less volatile than the S&P 500.
72.0% of Royal Gold shares are held by institutional investors. Comparatively, 81.9% of Newmont Mining shares are held by institutional investors. 1.1% of Royal Gold shares are held by insiders. Comparatively, 0.3% of Newmont Mining shares are held by 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.
Royal Gold pays an annual dividend of $1.00 per share and has a dividend yield of 1.2%. Newmont Mining pays an annual dividend of $0.30 per share and has a dividend yield of 0.8%. Royal Gold pays out 64.9% of its earnings in the form of a dividend. Newmont Mining pays out 42.9% 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. Royal Gold has raised its dividend for 2 consecutive years and Newmont Mining has raised its dividend for 13 consecutive years.
Valuation & Earnings
This table compares Royal Gold and Newmont Mining’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Royal Gold||$440.81 million||12.70||$101.53 million||$1.54||55.56|
|Newmont Mining||$6.71 billion||3.16||-$627.00 million||$0.70||56.84|
Royal Gold has higher earnings, but lower revenue than Newmont Mining. Royal Gold is trading at a lower price-to-earnings ratio than Newmont Mining, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of recent ratings for Royal Gold and Newmont Mining, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Royal Gold presently has a consensus target price of $94.68, indicating a potential upside of 10.66%. Newmont Mining has a consensus target price of $42.00, indicating a potential upside of 5.55%. Given Royal Gold’s higher possible upside, analysts clearly believe Royal Gold is more favorable than Newmont Mining.
This table compares Royal Gold and Newmont Mining’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Newmont Mining beats Royal Gold on 9 of the 17 factors compared between the two stocks.
Royal Gold Company Profile
Royal Gold, Inc., together with its subsidiaries, is engaged in acquiring and managing precious metal streams, royalties and similar interests. The Company operates through two segments: Acquisition and Management of Stream Interests, and Acquisition and Management of Royalty Interests. Its assets are located in Canada, Chile, Dominican Republic, Mexico, the United States, Africa, Australia and Other. As of June 30, 2016, the Company owned stream interests on four producing properties and three development-stage properties. It has investments in stream interests relating to Pueblo Viejo, Andacollo, Wassa and Prestea, and Rainy River. As of June 30, 2016, the Company owned royalty interests on 34 producing properties, 21 development-stage properties and 131 exploration-stage properties, of which it considered 50 to be evaluation-stage projects.
Newmont Mining Company Profile
Newmont Mining Corporation is a mining company, which is focused on the production of and exploration for gold and copper. The Company is primarily a gold producer with operations and/or assets in the United States, Australia, Peru, Ghana and Suriname. The Company’s segments include North America, South America, Asia Pacific and Africa. The Company’s North America segment consists primarily of Carlin, Phoenix, Twin Creeks and Long Canyon in the state of Nevada, and Cripple Creek &Victor (CC&V) in the state of Colorado, in the United States. The Company’s South America segment consists primarily of Yanacocha in Peru and Merian in Suriname. The Company’s Asia Pacific segment consists primarily of Boddington, Tanami and Kalgoorlie in Australia. The Company’s Africa segment consists primarily of Ahafo and Akyem in Ghana. As of December 31, 2016, it had gold reserves of 68.5 million ounces and an aggregate land position of approximately 23,000 square miles (59,000 square kilometers).
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