Reviewing Goldcorp (GG) and Richmont Mines (RIC)

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

Profitability

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

Net Margins Return on Equity Return on Assets
Goldcorp 12.82% 3.20% 2.03%
Richmont Mines 13.14% 8.60% 6.94%

Institutional and Insider Ownership

53.5% of Goldcorp shares are owned by institutional investors. Comparatively, 53.8% of Richmont Mines shares are owned by institutional investors. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings for Goldcorp and Richmont Mines, as reported by MarketBeat.

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

Goldcorp presently has a consensus target price of $16.76, indicating a potential upside of 41.59%. Richmont Mines has a consensus target price of $12.33, indicating a potential upside of 28.44%. Given Goldcorp’s higher possible upside, analysts clearly believe Goldcorp is more favorable than Richmont Mines.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Goldcorp $3.51 billion 2.92 $162.00 million $0.61 19.41
Richmont Mines $127.39 million 4.81 $9.41 million $0.27 35.56

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 13.1% of its earnings in the form of a dividend. Richmont Mines has raised its dividend for 4 consecutive years.

Summary

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

Goldcorp Company Profile

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.

Richmont Mines Company Profile

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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