Critical Review: Eldorado Gold (NYSE:EGO) & HudBay Minerals (NYSE:HBM)

HudBay Minerals (NYSE:HBM) and Eldorado Gold (NYSE:EGO) are both materials companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, institutional ownership, dividends, profitability and risk.

Volatility & Risk

HudBay Minerals has a beta of 1.58, suggesting that its stock price is 58% more volatile than the S&P 500. Comparatively, Eldorado Gold has a beta of 0.67, suggesting that its stock price is 33% less volatile than the S&P 500.

Earnings and Valuation

This table compares HudBay Minerals and Eldorado Gold”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
HudBay Minerals	$2.47 billion	4.64	$568.50 million	$1.70	15.17
Eldorado Gold	$1.82 billion	5.39	$507.26 million	$2.82	13.30

HudBay Minerals has higher revenue and earnings than Eldorado Gold. Eldorado Gold is trading at a lower price-to-earnings ratio than HudBay Minerals, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

57.8% of HudBay Minerals shares are owned by institutional investors. Comparatively, 69.6% of Eldorado Gold shares are owned by institutional investors. 0.3% of HudBay Minerals shares are owned by company insiders. Comparatively, 0.6% of Eldorado Gold shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares HudBay Minerals and Eldorado Gold’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
HudBay Minerals	27.48%	9.47%	5.44%
Eldorado Gold	29.83%	10.91%	7.07%

Dividends

HudBay Minerals pays an annual dividend of $0.02 per share and has a dividend yield of 0.1%. Eldorado Gold pays an annual dividend of $0.30 per share and has a dividend yield of 0.8%. HudBay Minerals pays out 1.2% of its earnings in the form of a dividend. Eldorado Gold pays out 10.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for HudBay Minerals and Eldorado Gold, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
HudBay Minerals	0	2	10	0	2.83
Eldorado Gold	0	7	6	2	2.67

HudBay Minerals currently has a consensus target price of $31.33, suggesting a potential upside of 21.51%. Eldorado Gold has a consensus target price of $46.57, suggesting a potential upside of 24.18%. Given Eldorado Gold’s higher possible upside, analysts plainly believe Eldorado Gold is more favorable than HudBay Minerals.

Summary

Eldorado Gold beats HudBay Minerals on 10 of the 17 factors compared between the two stocks.

About HudBay Minerals

Hudbay Minerals Inc., a diversified mining company, focuses on the exploration, development, operation, and optimization of properties in North and South America. It produces copper concentrates containing gold, silver, and molybdenum; gold concentrates containing zinc; zinc concentrates; molybdenum concentrates; and silver/gold doré. The company's flagship project is the 100% owned Constancia mine located in the Province of Chumbivilcas in southern Peru. Hudbay Minerals Inc. was founded in 1927 and is based in Toronto, Canada.

About Eldorado Gold

Eldorado Gold Corporation, together with its subsidiaries, engages in the mining, exploration, development, and sale of mineral products primarily in Turkey, Canada, Greece, and Romania. The company primarily produces gold, as well as silver, lead, and zinc. It holds a 100% interest in the Kisladag and Efemçukuru mines located in Turkey; Lamaque complex located in Canada; and Olympias, Stratoni, Skouries, Perama Hill, and Sapes gold mines located in Greece, as well as the 80.5% interest in Certej development projects located in Romania. The company was formerly known as Eldorado Corporation Ltd. and changed its name to Eldorado Gold Corporation in April 1996. Eldorado Gold Corporation was incorporated in 1996 and is headquartered in Vancouver, Canada.