Critical Review: Jaguar Mining (OTCMKTS:JAGGD) versus Vale (NYSE:VALE)

Jaguar Mining (OTCMKTS:JAGGD) and Vale (NYSE:VALE) are both basic materials companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, dividends, profitability, institutional ownership, risk and valuation.

Risk & Volatility

Jaguar Mining has a beta of 2.75, suggesting that its share price is 175% more volatile than the S&P 500. Comparatively, Vale has a beta of 0.91, suggesting that its share price is 9% less volatile than the S&P 500.

Earnings and Valuation

This table compares Jaguar Mining and Vale”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Jaguar Mining	$97.23 million	1.47	-$150,000.00	$0.50	3.96
Vale	$38.06 billion	1.18	$7.98 billion	$1.44	6.88

Vale has higher revenue and earnings than Jaguar Mining. Jaguar Mining is trading at a lower price-to-earnings ratio than Vale, indicating that it is currently the more affordable of the two stocks.

Dividends

Jaguar Mining pays an annual dividend of $0.25 per share and has a dividend yield of 12.4%. Vale pays an annual dividend of $1.28 per share and has a dividend yield of 12.9%. Jaguar Mining pays out 49.0% of its earnings in the form of a dividend. Vale pays out 88.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Jaguar Mining and Vale’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Jaguar Mining	28.17%	26.75%	17.80%
Vale	16.15%	17.38%	7.62%

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Jaguar Mining and Vale, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Jaguar Mining	0	0	0	0	0.00
Vale	0	7	3	0	2.30

Vale has a consensus target price of $13.26, indicating a potential upside of 33.83%. Given Vale’s stronger consensus rating and higher possible upside, analysts clearly believe Vale is more favorable than Jaguar Mining.

Insider and Institutional Ownership

21.9% of Vale shares are owned by institutional investors. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Vale beats Jaguar Mining on 9 of the 15 factors compared between the two stocks.

About Jaguar Mining

Jaguar Mining, Inc. engages in the acquisition, exploration, development and operation of gold producing properties in Brazil. Its mining operations include Turmalina, Paciência and Caeté. The firm is also developing the Grurupi Project and exploring the Iron Quadrangle and Pedra Branca Project. The company was founded by Daniel R. Titcomb in 1984 and is headquartered Toronto, Canada.

About Vale

Vale S.A., together with its subsidiaries, produces and sells iron ore and iron ore pellets for use as raw materials in steelmaking in Brazil and internationally. The company operates through Iron Solutions and Energy Transition Materials segments. The Iron Solutions segment produces and extracts iron ore and pellets, manganese, and other ferrous products; and provides related logistic services. The Energy Transition Materials segment produces and extracts nickel used to produce stainless steel, electric vehicles, and metal alloys; and its by-products, such as gold, silver, cobalt, precious metals, platinum, and others, as well as copper used in the construction sector to produce pipes and electrical wires. The company was formerly known as Companhia Vale do Rio Doce and changed its name to Vale S.A. in May 2009. Vale S.A. was founded in 1942 and is headquartered in Rio de Janeiro, Brazil.