Nexa Resources (NYSE:NEXA) and Vale (NYSE:VALE) are both basic materials companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, earnings, risk and valuation.

Dividends

Nexa Resources pays an annual dividend of $0.47 per share and has a dividend yield of 4.0%. Vale pays an annual dividend of $0.08 per share and has a dividend yield of 0.5%. Nexa Resources pays out 33.1% of its earnings in the form of a dividend. Vale pays out 5.9% 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.

Earnings and Valuation

This table compares Nexa Resources and Vale’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Nexa Resources $2.45 billion 0.64 $126.88 million $1.42 8.30
Vale $33.97 billion 2.30 $5.51 billion $1.35 11.10

Vale has higher revenue and earnings than Nexa Resources. Nexa Resources is trading at a lower price-to-earnings ratio than Vale, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Nexa Resources and Vale, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nexa Resources 1 0 6 0 2.71
Vale 1 5 8 0 2.50

Nexa Resources presently has a consensus price target of $22.52, suggesting a potential upside of 91.14%. Vale has a consensus price target of $14.60, suggesting a potential downside of 2.60%. Given Nexa Resources’ stronger consensus rating and higher possible upside, equities research analysts plainly believe Nexa Resources is more favorable than Vale.

Insider & Institutional Ownership

11.5% of Nexa Resources shares are held by institutional investors. Comparatively, 20.0% of Vale shares are held by institutional investors. 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 Nexa Resources and Vale’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Nexa Resources 4.47% 4.21% 2.05%
Vale 13.17% 17.47% 8.19%

Summary

Vale beats Nexa Resources on 10 of the 14 factors compared between the two stocks.

About Nexa Resources

Nexa Resources S.A., through its subsidiaries, engages in the zinc mining and smelting business in Latin America. It also produces copper, lead, silver and gold deposits. The company owns and operates five mines, including three located in the Central Andes of Peru; and two located in the state of Minas Gerais in Brazil. In addition, it refines byproducts, such as sulfuric acid, silver concentrate, copper cement, and copper sulfate. Nexa Resources S.A. also exports its products. The company was formerly known as VM Holding S.A. and changed its name to Nexa Resources S.A. in September 2017. The company was founded in 1956 and is based in Luxembourg City, Luxembourg. Nexa Resources S.A. is a subsidiary of Votorantim S.A.

About Vale

Vale S.A., together with its subsidiaries, produces and sells iron ore and iron ore pallets for use as raw materials in steelmaking in Brazil and internationally. It operates through Ferrous Minerals, Coal, and Base Metals segments. The Ferrous Minerals segment produces and extracts iron ore and pellets, manganese, ferroalloys, and others ferrous products and services, as well as engages in the provision of related railroad, port, and terminal logistics services. The Coal segment is involved in the extraction of metallurgical and thermal coal; and provision of related logistic services. The Base Metals segment produces and extracts non-ferrous minerals, including nickel, as well as its by-products, such as ferro-nickel, cobalt, gold, silver, copper, precious metals, and others. The company was formerly known as Companhia Vale do Rio Doce and changed its name to Vale S.A. in May 2009. Vale S.A. was founded in 1942 and is headquartered in Rio de Janeiro, Brazil.

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