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

Analyst Recommendations

This is a summary of recent ratings and target prices for Randgold Resources and Richmont Mines, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Randgold Resources 0 6 7 0 2.54
Richmont Mines 0 1 2 0 2.67

Randgold Resources presently has a consensus target price of $77.88, suggesting a potential downside of 15.08%. 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 plainly believe Richmont Mines is more favorable than Randgold Resources.

Profitability

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

Net Margins Return on Equity Return on Assets
Randgold Resources 21.49% 7.32% 6.81%
Richmont Mines 13.14% 8.60% 6.94%

Earnings & Valuation

This table compares Randgold Resources and Richmont Mines’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Randgold Resources $1.20 billion 7.18 $247.47 million $2.95 31.08
Richmont Mines $127.39 million 4.81 $9.41 million $0.27 35.56

Randgold Resources has higher revenue and earnings than Richmont Mines. Randgold Resources 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

Randgold Resources pays an annual dividend of $0.98 per share and has a dividend yield of 1.1%. Richmont Mines does not pay a dividend. Randgold Resources pays out 33.2% of its earnings in the form of a dividend.

Insider & Institutional Ownership

35.2% of Randgold Resources 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 endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

About Randgold Resources

Randgold Resources Limited is engaged in gold mining, exploration and related activities. The Company’s activities are focused on West and Central Africa. The Company operates through the gold mining segment. The Company operates various mines, such as Morila, Loulo, Gounkoto, Tongon and Kibali. The Company is exploring in African countries, such as Mali, Senegal, Cote d’Ivoire and the Democratic Republic of Congo (DRC). The Company also holds an interest in the Massawa project. The Company holds Morila Limited, which holds interests in the Morila mine in Mali. As of December 31, 2016, Morila mine has produced 122,370 ounces (oz) of gold. The Company holds a controlling interest in the Loulo mine, located in Mali, through Societe des Mines de Loulo SA (Loulo). The Loulo mine is mining from over two underground mines. As of December 31, 2016, Loulo mine has produced 350,604 oz of gold. It has a controlling interest in the Gounkoto mine through Societe des Mines de Gounkoto SA.

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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