Centerra Gold (NYSE:CGAU) vs. Franco-Nevada (NYSE:FNV) Financial Analysis

Centerra Gold (NYSE:CGAUGet Free Report) and Franco-Nevada (NYSE:FNVGet Free Report) are both basic materials companies, but which is the superior stock? We will contrast the two companies based on the strength of their institutional ownership, dividends, analyst recommendations, profitability, risk, valuation and earnings.

Institutional and Insider Ownership

51.5% of Centerra Gold shares are held by institutional investors. Comparatively, 66.7% of Franco-Nevada shares are held by institutional investors. 0.2% of Centerra Gold shares are held by company insiders. Comparatively, 0.7% of Franco-Nevada shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings and target prices for Centerra Gold and Franco-Nevada, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Centerra Gold 0 0 4 0 3.00
Franco-Nevada 1 4 4 0 2.33

Centerra Gold presently has a consensus price target of $9.07, indicating a potential upside of 78.65%. Franco-Nevada has a consensus price target of $152.75, indicating a potential upside of 39.88%. Given Centerra Gold’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Centerra Gold is more favorable than Franco-Nevada.

Dividends

Centerra Gold pays an annual dividend of $0.20 per share and has a dividend yield of 3.9%. Franco-Nevada pays an annual dividend of $1.36 per share and has a dividend yield of 1.2%. Centerra Gold pays out -24.1% of its earnings in the form of a dividend. Franco-Nevada pays out 38.4% 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. Franco-Nevada has increased its dividend for 11 consecutive years. Centerra Gold is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk and Volatility

Centerra Gold has a beta of 0.98, indicating that its stock price is 2% less volatile than the S&P 500. Comparatively, Franco-Nevada has a beta of 0.71, indicating that its stock price is 29% less volatile than the S&P 500.

Valuation and Earnings

This table compares Centerra Gold and Franco-Nevada’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Centerra Gold $850.19 million 1.29 -$77.21 million ($0.83) -6.11
Franco-Nevada $1.32 billion 15.95 $700.60 million $3.54 30.85

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

Profitability

This table compares Centerra Gold and Franco-Nevada’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Centerra Gold -18.96% -3.72% -2.90%
Franco-Nevada 55.10% 10.23% 9.91%

Summary

Franco-Nevada beats Centerra Gold on 11 of the 16 factors compared between the two stocks.

About Centerra Gold

(Get Free Report)

Centerra Gold Inc., a gold mining company, engages in the acquisition, exploration, development, and operation of gold and copper properties in North America, Turkey, and internationally. The company explores for gold, copper, and molybdenum deposits. Its flagship projects include the 100% owned Mount Milligan gold-copper mine located in British Columbia, Canada; and the Öksüt Gold Mine located in Turkey. The company was incorporated in 2002 and is headquartered in Toronto, Canada.

About Franco-Nevada

(Get Free Report)

Franco-Nevada Corporation operates as a gold-focused royalty and streaming company in Latin America, the United States, Canada, and internationally. It operates through Mining and Energy segments. The company manages its portfolio with a focus on precious metals, such as gold, silver, and platinum group metals; and engages in the sale of crude oil, natural gas, and natural gas liquids. The company was founded in 1986 and is headquartered in Toronto, Canada.

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