Contrasting Goldcorp (GG) and Randgold Resources Limited (NASDAQ:GOLD)

Randgold Resources Limited (NASDAQ: GOLD) and Goldcorp (NYSE:GG) are both basic materials companies, but which is the superior stock? We will contrast the two businesses based on the strength of their institutional ownership, risk, valuation, dividends, analyst recommendations, profitability and earnings.

Profitability

This table compares Randgold Resources Limited and Goldcorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Randgold Resources Limited 22.75% 7.89% 7.33%
Goldcorp 13.22% 3.43% 2.15%

Earnings & Valuation

This table compares Randgold Resources Limited and Goldcorp’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Randgold Resources Limited N/A N/A N/A $3.13 30.61
Goldcorp $3.52 billion 3.20 $1.33 billion $0.55 23.40

Goldcorp has higher revenue and earnings than Randgold Resources Limited. Goldcorp is trading at a lower price-to-earnings ratio than Randgold Resources Limited, indicating that it is currently the more affordable of the two stocks.

Dividends

Randgold Resources Limited pays an annual dividend of $0.98 per share and has a dividend yield of 1.0%. Goldcorp pays an annual dividend of $0.08 per share and has a dividend yield of 0.6%. Randgold Resources Limited pays out 31.3% of its earnings in the form of a dividend. Goldcorp pays out 14.5% 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. Goldcorp has increased its dividend for 4 consecutive years.

Analyst Ratings

This is a summary of recent ratings and price targets for Randgold Resources Limited and Goldcorp, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Randgold Resources Limited 1 7 6 0 2.36
Goldcorp 0 10 6 0 2.38

Randgold Resources Limited presently has a consensus target price of $102.33, suggesting a potential upside of 6.82%. Goldcorp has a consensus target price of $16.64, suggesting a potential upside of 29.26%. Given Goldcorp’s stronger consensus rating and higher possible upside, analysts plainly believe Goldcorp is more favorable than Randgold Resources Limited.

Institutional and Insider Ownership

36.5% of Randgold Resources Limited shares are held by institutional investors. Comparatively, 55.9% of Goldcorp shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Risk and Volatility

Randgold Resources Limited has a beta of 0.08, suggesting that its share price is 92% less volatile than the S&P 500. Comparatively, Goldcorp has a beta of 0.02, suggesting that its share price is 98% less volatile than the S&P 500.

About Randgold Resources Limited

Randgold Resources Limited is engaged in gold mining, exploration and related activities. The Company’s activities are focused on West and Central Africa. The Company operates through the gold mining segment. The Company operates various mines, such as Morila, Loulo, Gounkoto, Tongon and Kibali. The Company is exploring in African countries, such as Mali, Senegal, Cote d’Ivoire and the Democratic Republic of Congo (DRC). The Company also holds an interest in the Massawa project. The Company holds Morila Limited, which holds interests in the Morila mine in Mali. As of December 31, 2016, Morila mine has produced 122,370 ounces (oz) of gold. The Company holds a controlling interest in the Loulo mine, located in Mali, through Societe des Mines de Loulo SA (Loulo). The Loulo mine is mining from over two underground mines. As of December 31, 2016, Loulo mine has produced 350,604 oz of gold. It has a controlling interest in the Gounkoto mine through Societe des Mines de Gounkoto SA.

About Goldcorp

Goldcorp Inc. is a gold producer engaged in the operation, exploration, development and acquisition of precious metal properties in Canada, the United States, Mexico, and Central and South America. The Company is engaged in the sale of gold, silver, lead, zinc and copper. The Company’s segments include Red Lake Gold Mines Ontario Partnership (Red Lake), Goldcorp Canada Ltd./Goldcorp Inc. (Porcupine), Musselwhite, Les Mines Opinaca Ltee (Eleonore), Minera Penasquito S.A. de C.V. and Camino Rojo S.A. de C.V. (Penasquito), Desarrollos Mineros San Luis S.A. de C.V. (Los Filos), Montana Exploradora de Guatemala S.A. (Marlin), Oroplata S.A. (Cerro Negro), Corredor SpA (Project Corridor), Minera Alumbrera Limited (Alumbrera), El Morro and Pueblo Viejo Dominicana Corporation (Pueblo Viejo). The Company’s principal product is gold dore with the refined gold bullion sold primarily in the London spot market.

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