Randgold Resources (NASDAQ:GOLD) and Rare Element Resource (OTCMKTS:REEMF) are both basic materials companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, institutional ownership, dividends, profitability, valuation and analyst recommendations.

Profitability

This table compares Randgold Resources and Rare Element Resource’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Randgold Resources 21.82% 6.16% 5.75%
Rare Element Resource N/A -44.49% -23.19%

Earnings and Valuation

This table compares Randgold Resources and Rare Element Resource’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Randgold Resources $1.28 billion 12.29 $278.01 million $2.92 4.62
Rare Element Resource N/A N/A -$850,000.00 N/A N/A

Randgold Resources has higher revenue and earnings than Rare Element Resource.

Institutional and Insider Ownership

39.7% of Randgold Resources shares are held by institutional investors. Comparatively, 0.0% of Rare Element Resource shares are held by institutional investors. 2.6% of Rare Element Resource shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Randgold Resources pays an annual dividend of $0.28 per share and has a dividend yield of 2.1%. Rare Element Resource does not pay a dividend. Randgold Resources pays out 9.6% of its earnings in the form of a dividend. Randgold Resources has increased its dividend for 4 consecutive years.

Analyst Ratings

This is a summary of recent recommendations for Randgold Resources and Rare Element Resource, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Randgold Resources 0 4 8 0 2.67
Rare Element Resource 0 0 0 0 N/A

Randgold Resources presently has a consensus target price of $69.50, suggesting a potential upside of 415.58%. Given Randgold Resources’ higher probable upside, equities research analysts clearly believe Randgold Resources is more favorable than Rare Element Resource.

Volatility and Risk

Randgold Resources has a beta of -0.23, indicating that its stock price is 123% less volatile than the S&P 500. Comparatively, Rare Element Resource has a beta of 4.09, indicating that its stock price is 309% more volatile than the S&P 500.

Summary

Randgold Resources beats Rare Element Resource on 10 of the 13 factors compared between the two stocks.

About Randgold Resources

Randgold Resources Ltd. engages in the exploration and development of gold deposits. Its projects include the following: Loulo-Gounkoto complex, Morila gold mine, Tongon gold mine, Kibali gold mine, and Massawa. The company was founded in August 1995 and is headquartered in St. Helier, the United Kingdom.

About Rare Element Resource

Rare Element Resources Ltd. explores for mineral properties in the United States. The company primarily explores for gold and rare earth element (REE) deposits. It holds a 100% interest in the Bear Lodge property that comprises the Bear Lodge REE project and the Sundance Gold project located in central Crook County, northeast Wyoming. Rare Element Resources Ltd. is headquartered in Littleton, Colorado.

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