Vale (NYSE:VALE) and Southern Copper (NYSE:SCCO) are both large-cap basic materials companies, but which is the superior stock? We will contrast the two businesses based on the strength of their earnings, profitability, valuation, risk, dividends, analyst recommendations and institutional ownership.
Valuation & Earnings
This table compares Vale and Southern Copper's top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
Vale | $37.57 billion | 2.40 | $-1,683,000,000.00 | $1.60 | 11.01 |
Southern Copper | $7.29 billion | 8.28 | $1.49 billion | $1.92 | 40.65 |
Southern Copper has lower revenue, but higher earnings than Vale. Vale is trading at a lower price-to-earnings ratio than Southern Copper, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
19.0% of Vale shares are held by institutional investors. Comparatively, 6.9% of Southern Copper shares are held by institutional investors. 0.5% of Southern Copper shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
Profitability
This table compares Vale and Southern Copper's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
Vale | 7.33% | 25.65% | 10.46% |
Southern Copper | 17.17% | 18.67% | 7.95% |
Dividends
Vale pays an annual dividend of $0.25 per share and has a dividend yield of 1.4%. Southern Copper pays an annual dividend of $2.40 per share and has a dividend yield of 3.1%. Vale pays out 15.6% of its earnings in the form of a dividend. Southern Copper pays out 125.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Southern Copper has raised its dividend for 1 consecutive years. Southern Copper is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Volatility and Risk
Vale has a beta of 1.19, meaning that its share price is 19% more volatile than the S&P 500. Comparatively, Southern Copper has a beta of 1.16, meaning that its share price is 16% more volatile than the S&P 500.
Analyst Recommendations
This is a summary of current recommendations and price targets for Vale and Southern Copper, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
Vale | 0 | 1 | 14 | 0 | 2.93 |
Southern Copper | 5 | 3 | 0 | 0 | 1.38 |
Vale currently has a consensus price target of $15.7045, indicating a potential downside of 10.67%. Southern Copper has a consensus price target of $46.0625, indicating a potential downside of 40.59%. Given Vale's stronger consensus rating and higher probable upside, equities analysts plainly believe Vale is more favorable than Southern Copper.
Summary
Vale beats Southern Copper on 9 of the 17 factors compared between the two stocks.