Critical Review: BHP Group (NYSE:BHP) and OR Royalties (NYSE:OR)

OR Royalties (NYSE:OR) and BHP Group (NYSE:BHP) are both basic materials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, valuation, earnings, risk, dividends, analyst recommendations and profitability.

Analyst Ratings

This is a summary of recent recommendations for OR Royalties and BHP Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
OR Royalties	0	2	5	2	3.00
BHP Group	1	5	1	2	2.44

OR Royalties currently has a consensus target price of $38.25, suggesting a potential downside of 5.31%. BHP Group has a consensus target price of $56.00, suggesting a potential downside of 22.99%. Given OR Royalties’ stronger consensus rating and higher probable upside, equities research analysts clearly believe OR Royalties is more favorable than BHP Group.

Valuation & Earnings

This table compares OR Royalties and BHP Group”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
OR Royalties	$191.16 million	39.62	$16.27 million	$0.79	51.13
BHP Group	$51.26 billion	3.60	$9.02 billion	N/A	N/A

BHP Group has higher revenue and earnings than OR Royalties.

Dividends

OR Royalties pays an annual dividend of $0.22 per share and has a dividend yield of 0.5%. BHP Group pays an annual dividend of $2.37 per share and has a dividend yield of 3.3%. OR Royalties pays out 27.8% of its earnings in the form of a dividend. OR Royalties has raised its dividend for 1 consecutive years.

Profitability

This table compares OR Royalties and BHP Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
OR Royalties	60.72%	10.67%	9.48%
BHP Group	N/A	N/A	N/A

Volatility & Risk

OR Royalties has a beta of 0.76, meaning that its stock price is 24% less volatile than the S&P 500. Comparatively, BHP Group has a beta of 0.69, meaning that its stock price is 31% less volatile than the S&P 500.

Institutional & Insider Ownership

68.5% of OR Royalties shares are held by institutional investors. Comparatively, 3.8% of BHP Group shares are held by institutional investors. 0.6% of OR Royalties shares are held by company insiders. Comparatively, 0.0% of BHP Group shares are held by company insiders. 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

OR Royalties beats BHP Group on 11 of the 15 factors compared between the two stocks.

About OR Royalties

Osisko Gold Royalties Ltd acquires and manages precious metal and other royalties, streams, and other interests in Canada and internationally. It also owns options on offtake; royalty/stream financings; and exclusive rights to participate in future royalty/stream financings on various projects. The company’s primary asset is a 3-5% net smelter return royalty on the Canadian Malartic complex located in Canada. In addition, it is involved in the exploration, evaluation, and development of mining projects. It primarily explores for precious metals, including gold, silver, diamond, and others. Osisko Gold Royalties Ltd was founded in 2014 and is headquartered in Montreal, Canada.

About BHP Group

BHP Group Limited operates as a resources company in Australia, Europe, China, Japan, India, South Korea, the rest of Asia, North America, South America, and internationally. The company operates through Copper, Iron Ore, and Coal segments. It engages in the mining of copper, uranium, gold, zinc, lead, molybdenum, silver, iron ore, cobalt, and metallurgical and energy coal. The company is also involved in the mining, smelting, and refining of nickel, as well as potash development activities. In addition, it provides towing, freight, marketing and trading, marketing support, finance, administrative, and other services. The company was founded in 1851 and is headquartered in Melbourne, Australia.