Critical Analysis: Franco-Nevada Corporation (FNV) vs. Richmont Mines (RIC)

Richmont Mines (NYSE: RIC) and Franco-Nevada Corporation (NYSE:FNV) are both basic materials companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, dividends, earnings, profitability, valuation and risk.

Volatility & Risk

Richmont Mines has a beta of 0.24, meaning that its stock price is 76% less volatile than the S&P 500. Comparatively, Franco-Nevada Corporation has a beta of -0.14, meaning that its stock price is 114% less volatile than the S&P 500.

Institutional & Insider Ownership

53.8% of Richmont Mines shares are held by institutional investors. Comparatively, 59.9% of Franco-Nevada Corporation shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings and price targets for Richmont Mines and Franco-Nevada Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Richmont Mines 0 1 1 0 2.50
Franco-Nevada Corporation 0 6 5 0 2.45

Franco-Nevada Corporation has a consensus target price of $84.89, suggesting a potential upside of 0.96%. Given Franco-Nevada Corporation’s higher possible upside, analysts plainly believe Franco-Nevada Corporation is more favorable than Richmont Mines.

Dividends

Franco-Nevada Corporation pays an annual dividend of $0.92 per share and has a dividend yield of 1.1%. Richmont Mines does not pay a dividend. Franco-Nevada Corporation pays out 113.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Richmont Mines has raised its dividend for 4 consecutive years.

Profitability

This table compares Richmont Mines and Franco-Nevada Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Richmont Mines 9.63% 10.07% 8.14%
Franco-Nevada Corporation 22.12% 4.31% 4.23%

Earnings & Valuation

This table compares Richmont Mines and Franco-Nevada Corporation’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Richmont Mines $127.39 million 4.68 $9.41 million $0.27 34.63
Franco-Nevada Corporation $610.20 million 25.59 $122.20 million $0.81 103.80

Franco-Nevada Corporation has higher revenue and earnings than Richmont Mines. Richmont Mines is trading at a lower price-to-earnings ratio than Franco-Nevada Corporation, indicating that it is currently the more affordable of the two stocks.

Summary

Franco-Nevada Corporation beats Richmont Mines on 10 of the 16 factors compared between the two stocks.

About Richmont Mines

Richmont Mines Inc. is a mining company. The Company is engaged in 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 producing gold from the Island Gold Mine in Ontario and the Beaufor Mine in Quebec. The Island Gold mine is located 83 kilometers northeast of Wawa, Ontario. It is part of the Island Gold Project, which is divided into nine parts (properties) comprising 219 patented, leased and staked claims covering 7,772 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 25 kilometers northeast of Val-d’Or, Quebec. The Camflo mill has rated capacity of 1,200 short tons per day. It is located at Malartic, Quebec. The 7.58 square kilometers Wasamac property is located in the west of Rouyn-Noranda, Quebec.

About Franco-Nevada Corporation

Franco-Nevada Corporation (Franco-Nevada) is a gold-focused royalty and stream company. The Company has interests in silver, platinum group metals, oil and gas and other resource assets. The Company is engaged in resource sector royalty/stream acquisitions and management activities. It has a portfolio of properties in the United States, Canada, Mexico, Peru, Chile and Africa. Its properties in the United States include Goldstrike, Stillwater, Gold Quarry, Marigold, Fire Creek/Midas, Bald Mountain, South Arturo and Other. Its properties in Canada include Sudbury, Detour Lake, Golden Highway, Musselwhite, Hemlo, Kirkland Lake, Timmins West, Canadian Malartic and Other. Its properties in Latin America include Antapaccay, Antamina, Candelaria, Guadalupe-Palmarejo and Other. Its properties in Rest of World include Mine Waste Solutions (MWS), Sabodala, Subika, Tasiast, Karma, Duketon, Edikan and Other.

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