Contrasting McEwen Mining (MUX) & Pan American Silver (PAAS)

McEwen Mining (NYSE: MUX) and Pan American Silver (NASDAQ:PAAS) are both basic materials companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, risk, profitability, institutional ownership, earnings, dividends and analyst recommendations.

Insider and Institutional Ownership

31.1% of McEwen Mining shares are held by institutional investors. Comparatively, 49.6% of Pan American Silver shares are held by institutional investors. 26.1% of McEwen Mining shares are held by company insiders. Comparatively, 12.9% of Pan American Silver shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for McEwen Mining and Pan American Silver, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
McEwen Mining 0 0 3 0 3.00
Pan American Silver 0 1 11 0 2.92

McEwen Mining currently has a consensus target price of $4.00, indicating a potential upside of 94.17%. Pan American Silver has a consensus target price of $21.56, indicating a potential upside of 22.75%. Given McEwen Mining’s stronger consensus rating and higher possible upside, research analysts plainly believe McEwen Mining is more favorable than Pan American Silver.

Dividends

McEwen Mining pays an annual dividend of $0.01 per share and has a dividend yield of 0.5%. Pan American Silver pays an annual dividend of $0.14 per share and has a dividend yield of 0.8%. McEwen Mining pays out -33.3% of its earnings in the form of a dividend. Pan American Silver pays out 27.5% 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.

Profitability

This table compares McEwen Mining and Pan American Silver’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
McEwen Mining -13.62% -2.16% -1.92%
Pan American Silver 18.19% 6.35% 4.89%

Risk and Volatility

McEwen Mining has a beta of -1.17, indicating that its share price is 217% less volatile than the S&P 500. Comparatively, Pan American Silver has a beta of 0.33, indicating that its share price is 67% less volatile than the S&P 500.

Valuation & Earnings

This table compares McEwen Mining and Pan American Silver’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
McEwen Mining $67.72 million 10.26 -$10.63 million ($0.03) -68.67
Pan American Silver $816.83 million 3.30 $120.99 million $0.51 34.43

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

Summary

Pan American Silver beats McEwen Mining on 11 of the 16 factors compared between the two stocks.

McEwen Mining Company Profile

McEwen Mining Inc. engages in the exploration, development, production, and sale of gold and silver. The company owns 100% interests in the El Gallo 1 mine and El Gallo 2 project in the state of Sinaloa, Mexico; and the Black Fox Complex, Buffalo Ankerite, Fuller, Davidson Tisdale, and Black Fox North properties in Canada. It also owns a 61.01% interest in the Paymaster property in Canada; and a 49% interest in the San José mine in the province of Santa Cruz, Argentina. In addition, the company owns 100% interests in the Gold Bar and Tonkin properties in Nevada, the United States; and the Los Azules copper project in San Juan, Argentina. Further, it owns interests in other exploration properties located in the United States; and in the province of San Juan, Argentina, as well as in Mexico. The company was formerly known as US Gold Corporation and changed its name to McEwen Mining Inc. in January 2012. McEwen Mining Inc. was founded in 1979 and is based in Toronto, Canada.

Pan American Silver Company Profile

Pan American Silver Corp., together with its subsidiaries, engages in exploration, extraction, processing, refining, and reclamation of silver mines. The company owns and operates silver mines located in Peru, Mexico, Argentina, and Bolivia. It also produces and sells gold, zinc, lead, and copper. The company holds interests in the La Colorada, Dolores, Alamo Dorado, Huaron, Morococha, Manantial Espejo, and San Vicente mines. Pan American Silver Corp. was founded in 1979 and is headquartered in Vancouver, Canada.

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