Critical Review: Nexa Resources (NYSE:NEXA) and Ivanhoe Mines (OTCMKTS:IVPAF)

Ivanhoe Mines (OTCMKTS:IVPAF) and Nexa Resources (NYSE:NEXA) are both basic materials companies, but which is the better stock? We will contrast the two businesses based on the strength of their dividends, institutional ownership, valuation, earnings, analyst recommendations, profitability and risk.

Volatility & Risk

Ivanhoe Mines has a beta of 0.9, suggesting that its stock price is 10% less volatile than the S&P 500. Comparatively, Nexa Resources has a beta of 0.94, suggesting that its stock price is 6% less volatile than the S&P 500.

Valuation and Earnings

This table compares Ivanhoe Mines and Nexa Resources”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ivanhoe Mines	$441.61 million	24.52	$261.55 million	$0.09	84.33
Nexa Resources	$3.26 billion	0.60	$132.63 million	$1.58	9.36

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

Analyst Recommendations

This is a summary of recent ratings for Ivanhoe Mines and Nexa Resources, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ivanhoe Mines	0	5	3	0	2.38
Nexa Resources	1	6	0	0	1.86

Ivanhoe Mines currently has a consensus target price of $15.20, indicating a potential upside of 100.26%. Nexa Resources has a consensus target price of $13.00, indicating a potential downside of 12.12%. Given Ivanhoe Mines’ stronger consensus rating and higher possible upside, research analysts clearly believe Ivanhoe Mines is more favorable than Nexa Resources.

Profitability

This table compares Ivanhoe Mines and Nexa Resources’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ivanhoe Mines	24.86%	5.14%	3.87%
Nexa Resources	6.44%	16.32%	4.07%

Summary

Ivanhoe Mines beats Nexa Resources on 7 of the 12 factors compared between the two stocks.

About Ivanhoe Mines

Ivanhoe Mines Ltd. engages in the mining, development, and exploration of minerals and precious metals primarily in Africa. It explores for platinum, palladium, nickel, copper, gold, rhodium, zinc, silver, germanium, and lead deposits. The company's projects include the Platreef project located in the Northern Limb of South Africa's Bushveld Complex; the Kipushi project located in Haut-Katanga Province, Democratic Republic of Congo; and the Kamoa-Kakula project located within the Central African Copperbelt. It also holds a 100% interest in the Western Foreland exploration project covering an area of approximately 2,407 square kilometers located in the Democratic Republic of Congo. The company was formerly known as Ivanplats Limited and changed its name to Ivanhoe Mines Ltd. in August 2013. The company was incorporated in 1993 and is based in Vancouver, Canada.

About Nexa Resources

Nexa Resources S.A., together with its subsidiaries, engages in the zinc mining and smelting business worldwide. The company operates in two segments, Mining and Smelting. It produces zinc, zamac, zinc oxide, and zincal, as well as by-products, such as copper, lead, silver, gold, copper sulfate, sulfuric acid, copper cementum, silver concentrate, slag aggregates, and cadmium/sponge deposits. The company owns and operates six polymetallic mines, including three located in the Central Andes of Peru; two located in the State of Minas Gerais in Brazil; and one located in the State of Mato Grosso in Brazil. It also owns and operates three zinc smelters comprising one located in Cajamarquilla in Peru; and two located in the State of Minas Gerais in Brazil, which recovers and produces metallic zinc, zinc oxide, and by-products, such as sulfuric acid. The company also exports its products. Its products are used in civil construction, transportation, energy, agriculture, health, and consumer goods industries. 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, Luxembourg. Nexa Resources S.A. operates as a subsidiary of Votorantim S.A.