Critical Contrast: Southern Copper (NYSE:SCCO) & Constellium (NYSE:CSTM)

Constellium (NYSE:CSTM) and Southern Copper (NYSE:SCCO) are both materials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, profitability, valuation, risk, dividends and analyst recommendations.

Insider & Institutional Ownership

92.6% of Constellium shares are owned by institutional investors. Comparatively, 7.9% of Southern Copper shares are owned by institutional investors. 1.2% of Constellium shares are owned by company insiders. Comparatively, 0.1% of Southern Copper shares are owned by company insiders. 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.

Analyst Recommendations

This is a summary of current recommendations for Constellium and Southern Copper, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Constellium	0	3	5	0	2.62
Southern Copper	7	4	2	0	1.62

Constellium presently has a consensus price target of $33.29, indicating a potential upside of 52.85%. Southern Copper has a consensus price target of $159.26, indicating a potential downside of 5.57%. Given Constellium’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Constellium is more favorable than Southern Copper.

Profitability

This table compares Constellium and Southern Copper’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Constellium	5.73%	49.04%	9.96%
Southern Copper	37.16%	51.61%	27.33%

Earnings & Valuation

This table compares Constellium and Southern Copper”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Constellium	$8.45 billion	0.35	$273.00 million	$4.10	5.31
Southern Copper	$13.42 billion	10.49	$4.33 billion	$7.64	22.08

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

Risk and Volatility

Constellium has a beta of 1.63, indicating that its share price is 63% more volatile than the S&P 500. Comparatively, Southern Copper has a beta of 1.15, indicating that its share price is 15% more volatile than the S&P 500.

Summary

Southern Copper beats Constellium on 8 of the 14 factors compared between the two stocks.

About Constellium

Constellium SE, together with its subsidiaries, engages in the design, manufacture, and sale of rolled and extruded aluminum products for the packaging, aerospace, automotive, defense, and other transportation and industry end-markets. The company operates through three segments: Packaging & Automotive Rolled Products, Aerospace & Transportation, and Automotive Structures & Industry. The Packaging & Automotive Rolled Products segment produces rolled aluminum products, including can stock and closure stock for the beverage and food industry, as well as foil stock for the flexible packaging market. This segment also supplies automotive body sheets and heat exchangers for the automotive market; and specialty reflective sheets. The Aerospace & Transportation segment provides rolled aluminum products, including aerospace plates, sheets, and extrusions; and aerospace wing skins, as well as plates and sheets for use in transportation, industry, and defense applications. The Automotive Structures & Industry segment offers extruded aluminium products and aluminium structural components for the automotive industry, including crash-management systems, body structures, side impact beams, and battery enclosures; and fabricates hard and soft alloy extruded profiles for various industry applications in the automotive, engineering, rail, and other transportation end markets. This segment also provides downstream technology and services, which include pre-machining, surface treatment, research and development, and technical support services. It sells its products directly or through distributors in France, Germany, the Czech Republic, the United Kingdom, Switzerland, and the United States, as well as Shanghai, and Seoul. The company was incorporated in 2010 and is headquartered in Paris, France.

About Southern Copper

Southern Copper Corporation engages in mining, exploring, smelting, and refining copper and other minerals in Peru, Mexico, Argentina, Ecuador, and Chile. The company is involved in the mining, milling, and flotation of copper ore to produce copper and molybdenum concentrates; smelting of copper concentrates to produce blister and anode copper; refining of anode copper to produce copper cathodes; production of molybdenum concentrate and sulfuric acid; production of refined silver, gold, and other materials; and mining and processing of zinc, copper, molybdenum, silver, gold, and lead. It operates the Toquepala and Cuajone open-pit mines, and a smelter and refinery in Peru; and La Caridad, an open-pit copper mine, as well as a copper ore concentrator, a SX-EW plant, a smelter, refinery, and a rod plant in Mexico. The company also operates Buenavista, an open-pit copper mine, as well as two copper concentrators and two operating SX-EW plants in Mexico. In addition, it operates underground mines that produce zinc, lead, copper, silver, and gold; a coal mine; and a zinc refinery. The company has interests in 156,818 hectares and 502,688 hectares of concessions in Peru and Mexico; and 168,200 hectares and 28,453 hectares of exploration concessions in Argentina and Chile. Southern Copper Corporation was incorporated in 1952 and is based in Phoenix, Arizona. Southern Copper Corporation is a subsidiary of Americas Mining Corporation.