Anglo American (OTCMKTS:NGLOY) and Cleveland-Cliffs (NYSE:CLF) are both basic materials companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, risk, profitability, valuation, dividends and earnings.

Risk and Volatility

Anglo American has a beta of 0.31, indicating that its stock price is 69% less volatile than the S&P 500. Comparatively, Cleveland-Cliffs has a beta of 1.78, indicating that its stock price is 78% more volatile than the S&P 500.

Institutional & Insider Ownership

0.2% of Anglo American shares are held by institutional investors. Comparatively, 75.6% of Cleveland-Cliffs shares are held by institutional investors. 1.3% of Cleveland-Cliffs shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

Anglo American pays an annual dividend of $0.47 per share and has a dividend yield of 3.8%. Cleveland-Cliffs pays an annual dividend of $0.20 per share and has a dividend yield of 2.1%. Anglo American pays out 36.7% of its earnings in the form of a dividend. Cleveland-Cliffs pays out 9.4% 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 summary of current ratings and recommmendations for Anglo American and Cleveland-Cliffs, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Anglo American 1 2 4 1 2.63
Cleveland-Cliffs 1 2 7 0 2.60

Cleveland-Cliffs has a consensus target price of $12.67, suggesting a potential upside of 33.76%. Given Cleveland-Cliffs’ higher possible upside, analysts plainly believe Cleveland-Cliffs is more favorable than Anglo American.

Earnings and Valuation

This table compares Anglo American and Cleveland-Cliffs’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Anglo American $27.61 billion 0.93 $3.55 billion $1.28 9.61
Cleveland-Cliffs $2.33 billion 1.15 $1.13 billion $2.13 4.45

Anglo American has higher revenue and earnings than Cleveland-Cliffs. Cleveland-Cliffs is trading at a lower price-to-earnings ratio than Anglo American, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Anglo American and Cleveland-Cliffs’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Anglo American N/A N/A N/A
Cleveland-Cliffs 51.54% 786.91% 17.74%

Summary

Cleveland-Cliffs beats Anglo American on 11 of the 17 factors compared between the two stocks.

About Anglo American

Anglo American plc, together with its subsidiaries, engages in exploring, mining, and processing various metals and minerals worldwide. The company explores for rough and polished diamonds, copper, platinum group metals, metallurgical and thermal coal, and iron; and nickel and manganese ores, as well as alloys. Anglo American plc was founded in 1917 and is headquartered in London, the United Kingdom.

About Cleveland-Cliffs

Cleveland-Cliffs Inc. operates as an iron ore mining company in the United States. The company operates four iron ore mines in Michigan and Minnesota. It sells its products to integrated steel companies and steel producers in the United States and the Asia Pacific. The company was formerly known as Cliffs Natural Resources Inc. and changed its name to Cleveland-Cliffs Inc. in August 2017. Cleveland-Cliffs Inc. was founded in 1847 and is headquartered in Cleveland, Ohio.

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