Head to Head Contrast: Newmont (NYSE:NEM) vs. Centerra Gold (NYSE:CGAU)

Newmont (NYSE:NEM) and Centerra Gold (NYSE:CGAU) are both basic materials companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, dividends, risk, institutional ownership, valuation, analyst recommendations and earnings.

Volatility and Risk

Newmont has a beta of 0.49, suggesting that its stock price is 51% less volatile than the S&P 500. Comparatively, Centerra Gold has a beta of 0.98, suggesting that its stock price is 2% less volatile than the S&P 500.

Earnings and Valuation

This table compares Newmont and Centerra Gold”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Newmont	$14.88 billion	4.22	-$2.49 billion	($2.67)	-20.40
Centerra Gold	$1.27 billion	1.17	-$81.28 million	$0.27	25.67

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Newmont	-13.16%	8.35%	4.37%
Centerra Gold	10.68%	10.72%	8.07%

Institutional & Insider Ownership

68.8% of Newmont shares are owned by institutional investors. Comparatively, 55.4% of Centerra Gold shares are owned by institutional investors. 0.1% of Newmont shares are owned by insiders. Comparatively, 0.2% of Centerra Gold shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Dividends

Newmont pays an annual dividend of $1.00 per share and has a dividend yield of 1.8%. Centerra Gold pays an annual dividend of $0.20 per share and has a dividend yield of 2.9%. Newmont pays out -37.5% of its earnings in the form of a dividend. Centerra Gold pays out 74.1% 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.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Newmont and Centerra Gold, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Newmont	0	4	10	2	2.88
Centerra Gold	0	2	4	0	2.67

Newmont presently has a consensus target price of $52.62, indicating a potential downside of 3.40%. Centerra Gold has a consensus target price of $9.80, indicating a potential upside of 41.41%. Given Centerra Gold’s higher probable upside, analysts clearly believe Centerra Gold is more favorable than Newmont.

Summary

Centerra Gold beats Newmont on 10 of the 17 factors compared between the two stocks.

About Newmont

Newmont Corporation engages in the production and exploration of gold. It also explores for copper, silver, zinc, and lead. The company has operations and/or assets in the United States, Canada, Mexico, Dominican Republic, Peru, Suriname, Argentina, Chile, Australia, Papua New Guinea, Ecuador, Fiji, and Ghana. The company was founded in 1916 and is headquartered in Denver, Colorado.

About Centerra Gold

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 are 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 based in Toronto, Canada.