Contrasting Pan American Silver (NYSE:PAAS) and Gold Resource (NYSE:GORO)

Pan American Silver (NYSE:PAAS) and Gold Resource (NYSE:GORO) are both materials companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, analyst recommendations, valuation, profitability, dividends, institutional ownership and earnings.

Volatility and Risk

Pan American Silver has a beta of 0.75, suggesting that its share price is 25% less volatile than the S&P 500. Comparatively, Gold Resource has a beta of 1.06, suggesting that its share price is 6% more volatile than the S&P 500.

Profitability

This table compares Pan American Silver and Gold Resource’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Pan American Silver	32.04%	20.01%	14.48%
Gold Resource	-61.31%	-35.25%	-16.15%

Dividends

Pan American Silver pays an annual dividend of $0.74 per share and has a dividend yield of 1.8%. Gold Resource pays an annual dividend of $0.04 per share and has a dividend yield of 1.2%. Pan American Silver pays out 22.4% of its earnings in the form of a dividend. Gold Resource pays out 80.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Pan American Silver has increased its dividend for 2 consecutive years. Pan American Silver is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent recommendations for Pan American Silver and Gold Resource, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pan American Silver	0	3	7	0	2.70
Gold Resource	0	1	1	0	2.50

Pan American Silver currently has a consensus price target of $67.71, indicating a potential upside of 64.69%. Gold Resource has a consensus price target of $1.75, indicating a potential downside of 47.76%. Given Pan American Silver’s stronger consensus rating and higher probable upside, equities analysts plainly believe Pan American Silver is more favorable than Gold Resource.

Insider & Institutional Ownership

55.4% of Pan American Silver shares are owned by institutional investors. Comparatively, 18.4% of Gold Resource shares are owned by institutional investors. 12.9% of Pan American Silver shares are owned by insiders. Comparatively, 2.5% of Gold Resource shares are owned 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.

Valuation & Earnings

This table compares Pan American Silver and Gold Resource”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pan American Silver	$3.62 billion	4.70	$978.00 million	$3.31	12.42
Gold Resource	$55.34 million	9.80	-$16.02 million	$0.05	67.00

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

Summary

Pan American Silver beats Gold Resource on 15 of the 17 factors compared between the two stocks.

About Pan American Silver

Pan American Silver Corp. engages in the exploration, mine development, extraction, processing, refining, and reclamation of silver, gold, zinc, lead, and copper mines in Canada, Mexico, Peru, Bolivia, Argentina, Chile, and Brazil. The company was formerly known as Pan American Minerals Corp. and changed its name to Pan American Silver Corp. in April 1995. Pan American Silver Corp. was incorporated in 1979 and is headquartered in Vancouver, Canada.

About Gold Resource

Gold Resource Corporation engages in the exploration, development, and production of gold and silver projects in Mexico and the United States. The company also explores for copper, lead, and zinc deposits. Its principal assets are the 100% owned Don David gold mine and Back Forty project covering approximately 1,304 hectares located in Menominee county, Michigan. The company was incorporated in 1998 and is headquartered in Denver, Colorado.