Critical Analysis: National Steel (NYSE:SID) versus Largo (NYSE:LGO)

Largo (NYSE:LGO) and National Steel (NYSE:SID) are both small-cap materials companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, valuation, dividends, analyst recommendations and risk.

Institutional and Insider Ownership

64.1% of Largo shares are owned by institutional investors. 0.3% of Largo shares are owned by company insiders. Comparatively, 0.0% of National Steel 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 breakdown of recent recommendations and price targets for Largo and National Steel, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Largo	0	0	2	0	3.00
National Steel	3	0	0	0	1.00

Largo currently has a consensus price target of $2.10, suggesting a potential upside of 208.82%. National Steel has a consensus price target of $1.40, suggesting a potential upside of 18.14%. Given Largo’s stronger consensus rating and higher possible upside, equities analysts plainly believe Largo is more favorable than National Steel.

Profitability

This table compares Largo and National Steel’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Largo	-35.10%	-22.61%	-14.29%
National Steel	-5.26%	-14.90%	-2.38%

Risk and Volatility

Largo has a beta of 1.52, meaning that its stock price is 52% more volatile than the S&P 500. Comparatively, National Steel has a beta of 1.61, meaning that its stock price is 61% more volatile than the S&P 500.

Earnings & Valuation

This table compares Largo and National Steel”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Largo	$127.06 million	0.56	-$30.34 million	($1.07)	-0.64
National Steel	$8.02 billion	0.20	-$358.62 million	($0.34)	-3.49

Largo has higher earnings, but lower revenue than National Steel. National Steel is trading at a lower price-to-earnings ratio than Largo, indicating that it is currently the more affordable of the two stocks.

Summary

Largo beats National Steel on 8 of the 14 factors compared between the two stocks.

About Largo

Largo Inc. engages in the development and sale of vanadium-based energy storage systems in Canada. The company operates through, Sales & Trading, Mine Properties, Corporate, Exploration and Evaluation Properties, and Largo Clean Energy and Largo Physical Vanadium Segments. Its products include VPURE+ vanadium flakes that are used in the production of master alloys and aerospace applications; VPURE vanadium flakes ferrovanadium and vanadium carbon nitride for the steel industry; and VPURE+ vanadium powder for catalyst applications. The company offers renewable energy storage solutions through Largo Clean Energy. Its products are sourced from vanadium deposits at the Maracás Menchen Mine in Brazil. The company was formerly known as Largo Resources Ltd. and changed its name to Largo Inc. in November 2021. The company was incorporated in 1988 and is headquartered in Toronto, Canada.

About National Steel

Companhia Siderúrgica Nacional operates as an integrated steel producer in Brazil and Latin America. It operates through five segments: Steel Industry, Mining, Logistics, Energy, and Cement. The company offers flat steel products, such as hot and cold rolled, galvanized, galvalume, pre-painted, and metal sheets products; coil, sheets, and derivatives; tiles and derivatives, pipes, and profiles; long steel products; steel packaging solutions for the food industry; chemical packaging solution; and carbochemical products. It also provides steel cutting services; produces and sells cement; operates railway and port facilities; and generates electric power from its thermoelectric co-generation and hydroelectric power plants. In addition, the company explores for iron ore reserves at Casa de Pedra and Engenho mines located in the city of Congonhas; and limestone and dolomite at the Bocaina mine located in the city of Arcos in the state of Minas Gerais, Brazil, as well as produces tin. Companhia Siderúrgica Nacional was founded in 1941 and is headquartered in São Paulo, Brazil.