Fortuna Silver Mines (NYSE: FSM) and New Gold (NYSE:NGD) are both small-cap basic materials companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, dividends, risk, earnings and valuation.

Risk & Volatility

Fortuna Silver Mines has a beta of 0.17, suggesting that its stock price is 83% less volatile than the S&P 500. Comparatively, New Gold has a beta of 0.11, suggesting that its stock price is 89% less volatile than the S&P 500.

Profitability

This table compares Fortuna Silver Mines and New Gold’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fortuna Silver Mines 15.44% 9.15% 7.26%
New Gold 20.49% 5.05% 2.77%

Institutional & Insider Ownership

45.4% of Fortuna Silver Mines shares are owned by institutional investors. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Fortuna Silver Mines and New Gold’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Fortuna Silver Mines $210.30 million 3.09 $17.85 million $0.24 17.00
New Gold N/A N/A N/A $0.10 32.70

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

Analyst Ratings

This is a summary of recent recommendations and price targets for Fortuna Silver Mines and New Gold, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fortuna Silver Mines 0 1 3 1 3.00
New Gold 0 0 0 0 N/A

Fortuna Silver Mines presently has a consensus target price of $7.50, suggesting a potential upside of 83.82%. Given Fortuna Silver Mines’ higher possible upside, research analysts clearly believe Fortuna Silver Mines is more favorable than New Gold.

Summary

Fortuna Silver Mines beats New Gold on 9 of the 10 factors compared between the two stocks.

Fortuna Silver Mines Company Profile

Fortuna Silver Mines Inc. is a Canada-based mining company engaged in silver mining and related activities in Latin America, including exploration, extraction and processing. The Company operates the Caylloma silver, lead, and zinc mine (Caylloma) in southern Peru and the San Jose silver and gold mine (San Jose) in southern Mexico. The Company’s segments include Corporate, Bateas and Cuzcatlan. The Company owns interest in the Caylloma mine and related mining concessions located in southern Peru. The Caylloma property is located in the Caylloma Mining District, approximately 220 kilometers north-northwest of Arequipa, Peru. The Company produces approximately 1.7 million ounces of silver and over 1,160 ounces of gold at Caylloma. The Company’s San Jose property, which covers a silver gold bearing epithermal vein system is located in the state of Oaxaca in southern Mexico. The Company produces approximately 4.9 million ounces of silver and over 38,530 ounces of gold at San Jose.

New Gold Company Profile

New Gold Inc. is an intermediate gold mining company. The Company is engaged in the development and operation of mineral properties. Its segments include New Afton, Mesquite, Peak Mines, Cerro San Pedro, Corporate and Other. It has operating mines in Canada, the United States, Australia and Mexico; development projects in Canada, and a stream on gold production from a development property in Chile. Its development projects include Rainy River and Blackwater projects, which are located in Canada. Its Rainy River project is a gold project located approximately 65 kilometers northwest of Fort Frances in northwestern Ontario, Canada. The Rainy River comprises approximately 192 square kilometers of various rights and claims. The Blackwater Project is located approximately 160 kilometers southwest of the city of Prince George in central British Columbia, Canada and 110 kilometers southwest of the town of Vanderhoof. The Blackwater project covers an area of over 1,000 square kilometers.

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