Critical Review: Shimizu (OTCMKTS:SHMUY) and Ero Copper (NYSE:ERO)

Shimizu (OTCMKTS:SHMUY) and Ero Copper (NYSE:ERO) are both construction companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, earnings, dividends, profitability, valuation and risk.

Earnings and Valuation

This table compares Shimizu and Ero Copper’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Shimizu	$14.31 billion	0.33	$367.72 million	$0.41	63.37
Ero Copper	$427.48 million	4.63	$92.80 million	$0.98	19.67

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

Profitability

This table compares Shimizu and Ero Copper’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Shimizu	0.52%	-3.04%	-1.15%
Ero Copper	21.71%	13.16%	6.44%

Volatility and Risk

Shimizu has a beta of 0.23, suggesting that its stock price is 77% less volatile than the S&P 500. Comparatively, Ero Copper has a beta of 1.24, suggesting that its stock price is 24% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Shimizu and Ero Copper, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Shimizu	0	0	0	0	N/A
Ero Copper	0	4	0	0	2.00

Ero Copper has a consensus target price of $24.00, indicating a potential upside of 24.48%. Given Ero Copper’s higher possible upside, analysts clearly believe Ero Copper is more favorable than Shimizu.

Institutional and Insider Ownership

71.3% of Ero Copper shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Ero Copper beats Shimizu on 8 of the 11 factors compared between the two stocks.

About Shimizu

Shimizu Corporation, together with its subsidiaries, engages in the construction, development, engineering, and life cycle valuation businesses in Japan and internationally. The company proposes, plans, designs, builds, repairs, manages, operates, and maintains offices, plants, schools, hospitals, and other buildings, such as nursing homes, rehabilitation centers, temples, shrines, and architectures; offers design, build, and renovation for tunnels, bridges, dams, urban infrastructure, energy facilities, and other public works; provides construction for manufacturing facilities, high-rise buildings, hospitals, bridges, subways, and other projects; and develops and rents real estate properties, including condominiums, data centers, office buildings, logistics facilities, and other properties. It also offers engineering, procurement, and construction services in solar and wind power projects, environmental clean-up engineering, turn-key order fulfillment of plants, and ICT systems and engineering projects. In addition, the company provides facility operation and management services; infrastructure management, maintenance, and concession services; and generates power using renewable energy and sells electricity, as well as involved in commercialization of smart cities and provision of services using ICT technology. Further, it engages in the lease and sale of construction equipment and materials; provision of interior finishing and rebar works; insurance agency, security, and travel agency services; supply of PCR test kits; and rental of various tower cranes, crawler cranes, and other construction machinery and equipment. Additionally, the company offers construction equipment consulting services, such as construction planning, maintenance, and management services; property and building management services; and real estate consulting and brokerage services, as well as tenant leasing services. Shimizu Corporation was founded in 1804 and is headquartered in Tokyo, Japan.

About Ero Copper

Ero Copper Corp. engages in the exploration, development, and production of mining projects in Brazil. The company is involved in the production and sale of copper concentrate from the Caraíba operations located in the Curaçá Valley, northeastern Bahia state, Brazil, as well as gold and silver by-products. It also holds 100% interests in the Tucumã project, a copper development project located within southeastern Pará state; and the Xavantina Operations located in Mato Grosso state. Ero Copper Corp. was incorporated in 2016 and is headquartered in Vancouver, Canada.