Randgold Resources Limited (GOLD) vs. Richmont Mines (RIC) Critical Review

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

Insider and Institutional Ownership

58.8% of Richmont Mines shares are owned by institutional investors. Comparatively, 35.7% of Randgold Resources Limited shares are owned by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

Randgold Resources Limited pays an annual dividend of $0.98 per share and has a dividend yield of 1.0%. Richmont Mines does not pay a dividend. Randgold Resources Limited pays out 33.2% of its earnings in the form of a dividend.

Profitability

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

Net Margins Return on Equity Return on Assets
Richmont Mines 9.63% 10.07% 8.14%
Randgold Resources Limited 21.49% 7.32% 6.81%

Volatility and Risk

Richmont Mines has a beta of 0.31, meaning that its stock price is 69% less volatile than the S&P 500. Comparatively, Randgold Resources Limited has a beta of -0.07, meaning that its stock price is 107% less volatile than the S&P 500.

Valuation & Earnings

This table compares Richmont Mines and Randgold Resources Limited’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Richmont Mines $127.39 million 4.43 $9.41 million $0.22 40.23
Randgold Resources Limited $1.20 billion 7.33 $247.47 million $2.95 31.74

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

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Richmont Mines and Randgold Resources Limited, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Richmont Mines 0 1 1 0 2.50
Randgold Resources Limited 1 6 6 0 2.38

Randgold Resources Limited has a consensus price target of $77.88, suggesting a potential downside of 16.82%. Given Randgold Resources Limited’s higher probable upside, analysts clearly believe Randgold Resources Limited is more favorable than Richmont Mines.

Summary

Randgold Resources Limited beats Richmont Mines on 8 of the 15 factors compared between the two stocks.

Richmont Mines Company Profile

Richmont Mines Inc. is a mining company. The Company is engaged in mining, exploration and development of mining properties, principally gold. The Company operates gold mines at various sites in Quebec and Ontario. The Company’s segments include Quebec and Ontario. The Company is engaged in producing gold from the Island Gold Mine in Ontario and the Beaufor Mine in Quebec. The Island Gold mine is located 83 kilometers northeast of Wawa, Ontario. It is part of the Island Gold Project, which is divided into nine parts (properties) comprising 219 patented, leased and staked claims covering 7,772 hectares, mainly within the townships of Finan and Jacobson. The Island Gold Project is located in the Michipicoten Greenstone Belt. The Beaufor Mine is located 25 kilometers northeast of Val-d’Or, Quebec. The Camflo mill has rated capacity of 1,200 short tons per day. It is located at Malartic, Quebec. The 7.58 square kilometers Wasamac property is located in the west of Rouyn-Noranda, Quebec.

Randgold Resources Limited Company Profile

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.

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