Franco Nevada (FNV) & Richmont Mines (RIC) Critical Survey

Franco Nevada (NYSE: FNV) and Richmont Mines (NYSE:RIC) are both basic materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, analyst recommendations, valuation, earnings, institutional ownership, profitability and dividends.

Profitability

This table compares Franco Nevada and Richmont Mines’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Franco Nevada 22.12% 4.31% 4.23%
Richmont Mines 13.14% 8.60% 6.94%

Earnings & Valuation

This table compares Franco Nevada and Richmont Mines’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Franco Nevada $610.20 million 23.48 $122.20 million $0.79 97.65
Richmont Mines $127.39 million 4.81 $9.41 million $0.27 35.56

Franco Nevada has higher revenue and earnings than Richmont Mines. Richmont Mines is trading at a lower price-to-earnings ratio than Franco Nevada, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Franco Nevada and Richmont Mines, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Franco Nevada 1 6 4 0 2.27
Richmont Mines 0 1 2 0 2.67

Franco Nevada currently has a consensus target price of $84.78, suggesting a potential upside of 9.90%. Richmont Mines has a consensus target price of $12.33, suggesting a potential upside of 28.44%. Given Richmont Mines’ stronger consensus rating and higher probable upside, analysts clearly believe Richmont Mines is more favorable than Franco Nevada.

Insider & Institutional Ownership

61.4% of Franco Nevada shares are held by institutional investors. Comparatively, 53.8% of Richmont Mines shares are held by institutional investors. 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.

Dividends

Franco Nevada pays an annual dividend of $0.92 per share and has a dividend yield of 1.2%. Richmont Mines does not pay a dividend. Franco Nevada pays out 116.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Richmont Mines has raised its dividend for 4 consecutive years.

Summary

Franco Nevada beats Richmont Mines on 9 of the 15 factors compared between the two stocks.

About Franco Nevada

Franco-Nevada Corporation (Franco-Nevada) is a gold-focused royalty and stream company. The Company has interests in silver, platinum group metals, oil and gas and other resource assets. The Company is engaged in resource sector royalty/stream acquisitions and management activities. It has a portfolio of properties in the United States, Canada, Mexico, Peru, Chile and Africa. Its properties in the United States include Goldstrike, Stillwater, Gold Quarry, Marigold, Fire Creek/Midas, Bald Mountain, South Arturo and Other. Its properties in Canada include Sudbury, Detour Lake, Golden Highway, Musselwhite, Hemlo, Kirkland Lake, Timmins West, Canadian Malartic and Other. Its properties in Latin America include Antapaccay, Antamina, Candelaria, Guadalupe-Palmarejo and Other. Its properties in Rest of World include Mine Waste Solutions (MWS), Sabodala, Subika, Tasiast, Karma, Duketon, Edikan and Other.

About Richmont Mines

Richmont Mines Inc, formerly Ressources Minieres Rouyn Inc, is a Canada-based mining company. The Company is engaged in the mining, exploration and development of mining properties, principally gold. The Company operates gold mines at various sites in Quebec and Ontario. The Company’s segments include Quebec and Ontario. The Company is engaged in the production of gold from the Island Gold Mine in Ontario and the Beaufor Mine in Quebec. The Island Gold mine is located approximately 80 kilometers northeast of Wawa, Ontario. It is part of the Island Gold Project, which is divided into more than eight parts (properties) comprising approximately 200 patented, leased and staked claims covering approximately 8,000 hectares, mainly within the townships of Finan and Jacobson. The Island Gold Project is located in the Michipicoten Greenstone Belt. The Beaufor Mine is located approximately 20 kilometers northeast of Val-d’Or, Quebec.

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