Contrasting Rio Tinto (NYSE:RIO) & Cameco (NYSE:CCJ)

Rio Tinto (NYSE:RIO) and Cameco (NYSE:CCJ) are both large-cap basic materials companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, profitability, dividends, analyst recommendations, valuation and institutional ownership.

Volatility and Risk

Rio Tinto has a beta of 0.53, suggesting that its stock price is 47% less volatile than the S&P 500. Comparatively, Cameco has a beta of 0.98, suggesting that its stock price is 2% less volatile than the S&P 500.

Earnings & Valuation

This table compares Rio Tinto and Cameco”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rio Tinto	$57.64 billion	1.99	$9.97 billion	N/A	N/A
Cameco	$3.48 billion	13.24	$421.96 million	$0.97	109.15

Rio Tinto has higher revenue and earnings than Cameco.

Profitability

This table compares Rio Tinto and Cameco’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Rio Tinto	N/A	N/A	N/A
Cameco	17.00%	9.35%	6.45%

Insider & Institutional Ownership

19.3% of Rio Tinto shares are held by institutional investors. Comparatively, 70.2% of Cameco shares are held by institutional investors. 1.0% of Cameco shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Rio Tinto pays an annual dividend of $5.04 per share and has a dividend yield of 5.5%. Cameco pays an annual dividend of $0.17 per share and has a dividend yield of 0.2%. Cameco pays out 17.5% of its earnings in the form of a dividend. Cameco has increased its dividend for 1 consecutive years.

Analyst Recommendations

This is a summary of recent ratings and price targets for Rio Tinto and Cameco, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rio Tinto	0	10	4	1	2.40
Cameco	0	3	12	0	2.80

Rio Tinto presently has a consensus target price of $81.00, indicating a potential downside of 11.43%. Cameco has a consensus target price of $150.40, indicating a potential upside of 42.05%. Given Cameco’s stronger consensus rating and higher possible upside, analysts clearly believe Cameco is more favorable than Rio Tinto.

Summary

Cameco beats Rio Tinto on 11 of the 16 factors compared between the two stocks.

About Rio Tinto

Rio Tinto Group engages in exploring, mining, and processing mineral resources worldwide. The company operates through Iron Ore, Aluminium, Copper, and Minerals Segments. The Iron Ore segment engages in the iron ore mining, and salt and gypsum production in Western Australia. The Aluminum segment is involved in bauxite mining; alumina refining; and aluminium smelting. The Copper segment engages in mining and refining of copper, gold, silver, molybdenum, and other by-products and exploration activities. The Minerals segment is involved in mining and processing of borates, titanium dioxide feedstock, and iron concentrate and pellets; diamond mining, sorting, and marketing; and development projects for battery materials, such as lithium. It also owns and operates open pit and underground mines; and refineries, smelters, processing plants and power, and shipping facilities. Rio Tinto Group was founded in 1873 and is headquartered in London, the United Kingdom.

About Cameco

Cameco Corporation provides uranium for the generation of electricity. It operates through Uranium, Fuel Services, Westinghouse segments. The Uranium segment is involved in the exploration for, mining, and milling, purchase, and sale of uranium concentrate. The Fuel Services segment engages in the refining, conversion, and fabrication of uranium concentrate, as well as the purchase and sale of conversion services. This segment also produces CANDU reactor fuel bundles and other reactor components. The company offers nuclear fuel processing services. The Westinghouse segment engages in the manufacture of nuclear reactor technology original equipment. This segment provides products and services to commercial utilities and government agencies; and outage and maintenance services, engineering support, instrumentation and controls equipment, plant modification, and components and parts to nuclear reactors. It sells its uranium and fuel services to nuclear utilities in the Americas, Europe, and Asia. Cameco Corporation was incorporated in 1987 and is headquartered in Saskatoon, Canada.