Critical Review: Fortuna Silver Mines (FSM) versus BHP Billiton PLC (NYSE:BBL)

Fortuna Silver Mines (NYSE: FSM) and BHP Billiton PLC (NYSE:BBL) are both basic materials companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, valuation, dividends, profitability, risk, analyst recommendations and institutional ownership.

Valuation & Earnings

This table compares Fortuna Silver Mines and BHP Billiton PLC’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Fortuna Silver Mines $251.82 million 2.79 $118.59 million $0.25 17.68
BHP Billiton PLC $34.69 billion 2.68 $15.48 billion N/A N/A

BHP Billiton PLC has higher revenue and earnings than Fortuna Silver Mines.

Profitability

This table compares Fortuna Silver Mines and BHP Billiton PLC’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fortuna Silver Mines 15.97% 9.08% 7.07%
BHP Billiton PLC N/A N/A N/A

Dividends

BHP Billiton PLC pays an annual dividend of $1.08 per share and has a dividend yield of 3.1%. Fortuna Silver Mines does not pay a dividend.

Risk and Volatility

Fortuna Silver Mines has a beta of 0.27, indicating that its share price is 73% less volatile than the S&P 500. Comparatively, BHP Billiton PLC has a beta of 1.05, indicating that its share price is 5% more volatile than the S&P 500.

Insider and Institutional Ownership

51.3% of Fortuna Silver Mines shares are held by institutional investors. Comparatively, 4.3% of BHP Billiton PLC shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and target prices for Fortuna Silver Mines and BHP Billiton PLC, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fortuna Silver Mines 0 1 3 1 3.00
BHP Billiton PLC 1 5 1 0 2.00

Fortuna Silver Mines currently has a consensus price target of $9.00, indicating a potential upside of 103.62%. BHP Billiton PLC has a consensus price target of $34.00, indicating a potential downside of 2.72%. Given Fortuna Silver Mines’ stronger consensus rating and higher possible upside, equities analysts plainly believe Fortuna Silver Mines is more favorable than BHP Billiton PLC.

Summary

Fortuna Silver Mines beats BHP Billiton PLC on 9 of the 14 factors compared between the two stocks.

Fortuna Silver Mines Company Profile

Fortuna Silver Mines Inc. is a Canada-based mining company engaged in silver mining and related activities in Latin America, including exploration, extraction and processing. The Company operates the Caylloma silver, lead, and zinc mine (Caylloma) in southern Peru and the San Jose silver and gold mine (San Jose) in southern Mexico. The Company’s segments include Corporate, Bateas and Cuzcatlan. The Company owns interest in the Caylloma mine and related mining concessions located in southern Peru. The Caylloma property is located in the Caylloma Mining District, approximately 220 kilometers north-northwest of Arequipa, Peru. The Company produces approximately 1.7 million ounces of silver and over 1,160 ounces of gold at Caylloma. The Company’s San Jose property, which covers a silver gold bearing epithermal vein system is located in the state of Oaxaca in southern Mexico. The Company produces approximately 4.9 million ounces of silver and over 38,530 ounces of gold at San Jose.

BHP Billiton PLC Company Profile

BHP Billiton Plc is a global resources company. The Company is a producer of various commodities, including iron ore, metallurgical coal, copper and uranium. Its segments include Petroleum, Copper, Iron Ore and Coal. The Petroleum segment is engaged in the exploration, development and production of oil and gas. The Copper segment is engaged in mining of copper, silver, lead, zinc, molybdenum, uranium and gold. The Iron Ore segment is engaged in mining of iron ore. The Coal segment is engaged in mining of metallurgical coal and thermal (energy) coal. Its businesses include Minerals Australia, Minerals Americas, Petroleum and Marketing. It extracts and processes minerals, oil and gas from its production operations located primarily in Australia and the Americas. It manages product distribution through its global logistics chain, including freight and pipeline transportation. It sells its products through direct supply agreements with its customers and on global commodity exchanges.

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