Comparing Algoma Steel Group (NASDAQ:ASTL) and Gold Resource (NYSE:GORO)

Gold Resource (NYSE:GORO) and Algoma Steel Group (NASDAQ:ASTL) are both small-cap 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, dividends, analyst recommendations and risk.

Analyst Ratings

This is a breakdown of current recommendations for Gold Resource and Algoma Steel Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gold Resource	0	1	1	0	2.50
Algoma Steel Group	1	3	0	0	1.75

Gold Resource presently has a consensus target price of $1.75, suggesting a potential downside of 49.67%. Given Gold Resource’s stronger consensus rating and higher probable upside, analysts clearly believe Gold Resource is more favorable than Algoma Steel Group.

Institutional & Insider Ownership

18.4% of Gold Resource shares are held by institutional investors. Comparatively, 72.0% of Algoma Steel Group shares are held by institutional investors. 1.3% of Gold Resource shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Volatility and Risk

Gold Resource has a beta of 1.06, indicating that its stock price is 6% more volatile than the S&P 500. Comparatively, Algoma Steel Group has a beta of 1.64, indicating that its stock price is 64% more volatile than the S&P 500.

Earnings and Valuation

This table compares Gold Resource and Algoma Steel Group”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Gold Resource	$55.34 million	10.17	-$16.02 million	$0.05	69.54
Algoma Steel Group	$1.49 billion	0.30	-$704.89 million	($7.35)	-0.58

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

Profitability

This table compares Gold Resource and Algoma Steel Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Gold Resource	-61.31%	-35.25%	-16.15%
Algoma Steel Group	-71.60%	-110.49%	-25.74%

Summary

Gold Resource beats Algoma Steel Group on 10 of the 14 factors compared between the two stocks.

About Gold Resource

Gold Resource Corporation engages in the exploration, development, and production of gold and silver projects in Mexico and the United States. The company also explores for copper, lead, and zinc deposits. Its principal assets are the 100% owned Don David gold mine and Back Forty project covering approximately 1,304 hectares located in Menominee county, Michigan. The company was incorporated in 1998 and is headquartered in Denver, Colorado.

About Algoma Steel Group

Algoma Steel Group Inc. produces and sells steel products primarily in North America. The company provides flat/sheet steel products, including temper rolling, cold rolled, hot-rolled pickled and oiled products, floor plate, and cut-to-length products for the automotive industry, hollow structural product manufacturers, and the light manufacturing and transportation industries; and plate steel products that consist of rolled, hot-rolled, and heat-treated for use in the construction or manufacture of railcars, buildings, bridges, off-highway equipment, storage tanks, ships, and military applications. Algoma Steel Group Inc. was founded in 1901 and is headquartered in Sault Ste. Marie, Canada.