Rio Tinto (NYSE:RIO) and US Gold (NASDAQ:USAU) are both basic 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.

Institutional & Insider Ownership

7.5% of Rio Tinto shares are held by institutional investors. Comparatively, 16.8% of US Gold shares are held by institutional investors. 12.1% of US Gold 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.

Analyst Ratings

This is a breakdown of current recommendations for Rio Tinto and US Gold, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Rio Tinto 4 8 8 0 2.20
US Gold 0 0 1 0 3.00

Rio Tinto presently has a consensus target price of $57.00, suggesting a potential upside of 19.77%. US Gold has a consensus target price of $14.50, suggesting a potential upside of 179.92%. Given US Gold’s stronger consensus rating and higher probable upside, analysts clearly believe US Gold is more favorable than Rio Tinto.

Profitability

This table compares Rio Tinto and US Gold’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Rio Tinto N/A N/A N/A
US Gold N/A -74.08% -71.52%

Earnings & Valuation

This table compares Rio Tinto and US Gold’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Rio Tinto $43.17 billion 1.38 $8.01 billion $6.33 7.52
US Gold N/A N/A -$8.05 million ($4.40) -1.18

Rio Tinto has higher revenue and earnings than US Gold. US Gold is trading at a lower price-to-earnings ratio than Rio Tinto, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Rio Tinto has a beta of 0.61, indicating that its stock price is 39% less volatile than the S&P 500. Comparatively, US Gold has a beta of 1.13, indicating that its stock price is 13% more volatile than the S&P 500.

Summary

Rio Tinto beats US Gold on 7 of the 12 factors compared between the two stocks.

About Rio Tinto

Rio Tinto Group engages in finding, mining, and processing mineral resources worldwide. The company offers aluminium, silver, molybdenum, copper, diamonds, gold, borates, titanium dioxide, salt, iron ore, and uranium. It is also involved in the alumina production; primary aluminium smelting; bauxite mining; alumina refining; and ilmenite mining, as well as provision of gypsum. Rio Tinto Group is headquartered in London, the United Kingdom.

About US Gold

U.S. Gold Corp. operates as a gold exploration and development company in the United States. It has a portfolio of development and exploration properties. The company's properties include the Copper King project, an advanced stage gold and copper exploration and development project located in southeast Wyoming; Keystone project, an exploration property on the Cortez Trend in Nevada; and the Gold Bar North project, a gold exploration property located in Eureka County, Nevada. The company is based in Elko, Nevada.

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