Richmont Mines (RIC) versus Goldcorp (GG) Critical Analysis

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

Analyst Recommendations

This is a summary of recent recommendations and price targets for Richmont Mines and Goldcorp, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Richmont Mines 0 1 2 0 2.67
Goldcorp 0 7 10 0 2.59

Richmont Mines presently has a consensus price target of $12.33, indicating a potential upside of 28.44%. Goldcorp has a consensus price target of $16.76, indicating a potential upside of 39.47%. Given Goldcorp’s higher possible upside, analysts plainly believe Goldcorp is more favorable than Richmont Mines.

Profitability

This table compares Richmont Mines and Goldcorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Richmont Mines 13.14% 8.60% 6.94%
Goldcorp 14.91% 3.27% 2.06%

Institutional & Insider Ownership

53.8% of Richmont Mines shares are held by institutional investors. Comparatively, 53.5% of Goldcorp shares are held 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.

Earnings and Valuation

This table compares Richmont Mines and Goldcorp’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Richmont Mines $127.39 million 4.81 $9.41 million $0.27 35.56
Goldcorp $3.51 billion 2.97 $162.00 million $0.60 20.03

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

Dividends

Goldcorp pays an annual dividend of $0.08 per share and has a dividend yield of 0.7%. Richmont Mines does not pay a dividend. Goldcorp pays out 13.3% of its earnings in the form of a dividend. Richmont Mines has increased its dividend for 4 consecutive years.

Summary

Richmont Mines beats Goldcorp on 8 of the 15 factors compared between the two stocks.

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.

About Goldcorp

Goldcorp Inc. is a gold producer engaged in the operation, exploration, development and acquisition of precious metal properties in Canada, the United States, Mexico, and Central and South America. The Company is engaged in the sale of gold, silver, lead, zinc and copper. The Company’s segments include Red Lake Gold Mines Ontario Partnership (Red Lake), Goldcorp Canada Ltd./Goldcorp Inc. (Porcupine), Musselwhite, Les Mines Opinaca Ltee (Eleonore), Minera Penasquito S.A. de C.V. and Camino Rojo S.A. de C.V. (Penasquito), Desarrollos Mineros San Luis S.A. de C.V. (Los Filos), Montana Exploradora de Guatemala S.A. (Marlin), Oroplata S.A. (Cerro Negro), Corredor SpA (Project Corridor), Minera Alumbrera Limited (Alumbrera), El Morro and Pueblo Viejo Dominicana Corporation (Pueblo Viejo). The Company’s principal product is gold dore with the refined gold bullion sold primarily in the London spot market.

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