Critical Review: Dorchester Minerals, L.P. (DMLP) vs. Fortuna Silver Mines (FSM)
Dorchester Minerals, L.P. (NASDAQ: DMLP) and Fortuna Silver Mines (NYSE:FSM) are both small-cap oils/energy companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, dividends, earnings, risk, analyst recommendations, profitability and valuation.
Insider and Institutional Ownership
13.3% of Dorchester Minerals, L.P. shares are held by institutional investors. Comparatively, 41.6% of Fortuna Silver Mines shares are held by institutional investors. 9.2% of Dorchester Minerals, L.P. 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.
Earnings and Valuation
This table compares Dorchester Minerals, L.P. and Fortuna Silver Mines’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Dorchester Minerals, L.P.||$45.34 million||10.25||$38.15 million||$0.95||15.16|
|Fortuna Silver Mines||$251.82 million||3.14||$118.59 million||$0.25||19.88|
Fortuna Silver Mines has higher revenue and earnings than Dorchester Minerals, L.P.. Dorchester Minerals, L.P. is trading at a lower price-to-earnings ratio than Fortuna Silver Mines, indicating that it is currently the more affordable of the two stocks.
Dorchester Minerals, L.P. pays an annual dividend of $1.29 per share and has a dividend yield of 9.0%. Fortuna Silver Mines does not pay a dividend. Dorchester Minerals, L.P. pays out 135.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
This table compares Dorchester Minerals, L.P. and Fortuna Silver Mines’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Dorchester Minerals, L.P.||65.28%||41.71%||41.15%|
|Fortuna Silver Mines||15.97%||9.08%||7.07%|
This is a breakdown of current ratings and price targets for Dorchester Minerals, L.P. and Fortuna Silver Mines, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Dorchester Minerals, L.P.||0||0||0||0||N/A|
|Fortuna Silver Mines||0||1||3||1||3.00|
Fortuna Silver Mines has a consensus target price of $9.00, suggesting a potential upside of 81.09%. Given Fortuna Silver Mines’ higher possible upside, analysts plainly believe Fortuna Silver Mines is more favorable than Dorchester Minerals, L.P..
Risk and Volatility
Dorchester Minerals, L.P. has a beta of 0.8, indicating that its share price is 20% less volatile than the S&P 500. Comparatively, Fortuna Silver Mines has a beta of 0.22, indicating that its share price is 78% less volatile than the S&P 500.
About Dorchester Minerals, L.P.
Dorchester Minerals, L.P. is a limited partnership company. The Company is engaged in the acquisition, ownership and administration of Royalty Properties and net profits interests (NPIs). As of December 31, 2016, the Royalty Properties consisted of producing and nonproducing mineral, royalty, overriding royalty, net profits and leasehold interests located in 574 counties and parishes in 25 states. The NPIs represent net profits overriding royalty interests in various properties owned by the Company. As of December 31, 2016, the Company had completed 270 wells on its Royalty Properties in seven states, and 39 new wells completed on its Properties in three states. The Company owns both a royalty interest and a net profits interest. The Company’s general partner is Dorchester Minerals Management LP.
About Fortuna Silver Mines
Fortuna Silver Mines Inc. is a Canada-based mining company engaged in silver mining and related activities in Latin America, including exploration, extraction and processing. The Company operates the Caylloma silver, lead, and zinc mine (Caylloma) in southern Peru and the San Jose silver and gold mine (San Jose) in southern Mexico. The Company’s segments include Corporate, Bateas and Cuzcatlan. The Company owns interest in the Caylloma mine and related mining concessions located in southern Peru. The Caylloma property is located in the Caylloma Mining District, approximately 220 kilometers north-northwest of Arequipa, Peru. The Company produces approximately 1.7 million ounces of silver and over 1,160 ounces of gold at Caylloma. The Company’s San Jose property, which covers a silver gold bearing epithermal vein system is located in the state of Oaxaca in southern Mexico. The Company produces approximately 4.9 million ounces of silver and over 38,530 ounces of gold at San Jose.
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