Royal Gold (NASDAQ:RGLD) versus Friedman Industries (NASDAQ:FRD) Head-To-Head Analysis

Friedman Industries (NASDAQ:FRD) and Royal Gold (NASDAQ:RGLD) are both materials companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, earnings, analyst recommendations, profitability and risk.

Risk & Volatility

Friedman Industries has a beta of 1.62, suggesting that its share price is 62% more volatile than the S&P 500. Comparatively, Royal Gold has a beta of 0.5, suggesting that its share price is 50% less volatile than the S&P 500.

Profitability

This table compares Friedman Industries and Royal Gold’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Friedman Industries	3.63%	18.29%	8.19%
Royal Gold	47.74%	12.06%	9.41%

Dividends

Friedman Industries pays an annual dividend of $0.16 per share and has a dividend yield of 0.4%. Royal Gold pays an annual dividend of $1.90 per share and has a dividend yield of 0.7%. Friedman Industries pays out 4.2% of its earnings in the form of a dividend. Royal Gold pays out 20.7% 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. Friedman Industries has increased its dividend for 1 consecutive years and Royal Gold has increased its dividend for 25 consecutive years. Royal Gold is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Friedman Industries and Royal Gold”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Friedman Industries	$646.91 million	0.51	$19.53 million	$3.84	11.88
Royal Gold	$1.03 billion	21.55	$467.27 million	$9.16	28.61

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

Institutional & Insider Ownership

33.3% of Friedman Industries shares are held by institutional investors. Comparatively, 83.7% of Royal Gold shares are held by institutional investors. 6.6% of Friedman Industries shares are held by insiders. Comparatively, 0.3% of Royal Gold shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings for Friedman Industries and Royal Gold, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Friedman Industries	0	0	1	0	3.00
Royal Gold	2	3	7	0	2.42

Royal Gold has a consensus target price of $285.10, suggesting a potential upside of 8.77%. Given Royal Gold’s higher probable upside, analysts clearly believe Royal Gold is more favorable than Friedman Industries.

Summary

Royal Gold beats Friedman Industries on 12 of the 17 factors compared between the two stocks.

About Friedman Industries

Friedman Industries, Incorporated engages in steel processing, pipe manufacturing and processing, and the steel and pipe distribution businesses the United States. It operates in two segments, Coil and Tubular. The Coil segment is involved in the conversion of steel coils into flat sheet and plate steel cut to customer specifications and reselling steel coils. This segment also processes customer-owned coils on a fee basis. The company sells coil products and processing services to approximately 200 customers located primarily in the midwestern, southwestern and southeastern regions of the United States. Its principal customers for these products and services are steel distributors and customers manufacturing steel products, such as steel buildings, railroad cars, barges, tanks and containers, trailers, component parts and other fabricated steel products. The Tubular segment manufactures line and oil country pipes, as well as pipes for structural applications. This segment sells its tubular products principally to steel and pipe distributors through its own sales force. The company was incorporated in 1965 and is headquartered in Longview, Texas.

About Royal Gold

Royal Gold, Inc., together with its subsidiaries, acquires and manages precious metal streams, royalties, and related interests. The company engages in acquiring stream and royalty interests or to finance projects that are in production, development, or in the exploration stage in exchange for stream or royalty interests, which primarily consists of gold, silver, copper, nickel, zinc, lead, and other metals. Its stream and royalty interests on properties are located in the United States, Canada, Chile, the Dominican Republic, Australia, Africa, Mexico, Botswana, and internationally. Royal Gold, Inc. was incorporated in 1981 and is headquartered in Denver, Colorado.