Franco Nevada (NYSE:FNV) and Gold Reserve (OTCMKTS:GDRZF) are both basic materials companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, analyst recommendations, institutional ownership, risk, valuation, dividends and profitability.

Profitability

This table compares Franco Nevada and Gold Reserve’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Franco Nevada 19.91% 7.85% 7.38%
Gold Reserve N/A -12.58% -12.35%

Dividends

Franco Nevada pays an annual dividend of $1.00 per share and has a dividend yield of 0.7%. Gold Reserve pays an annual dividend of $0.76 per share and has a dividend yield of 49.0%. Franco Nevada pays out 54.9% of its earnings in the form of a dividend. Franco Nevada has raised its dividend for 7 consecutive years.

Analyst Ratings

This is a summary of recent recommendations for Franco Nevada and Gold Reserve, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Franco Nevada 1 7 4 0 2.25
Gold Reserve 0 0 0 0 N/A

Franco Nevada currently has a consensus price target of $145.82, indicating a potential downside of 3.21%. Given Franco Nevada’s higher probable upside, equities analysts plainly believe Franco Nevada is more favorable than Gold Reserve.

Risk and Volatility

Franco Nevada has a beta of 0.59, meaning that its share price is 41% less volatile than the S&P 500. Comparatively, Gold Reserve has a beta of 0.35, meaning that its share price is 65% less volatile than the S&P 500.

Valuation and Earnings

This table compares Franco Nevada and Gold Reserve’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Franco Nevada $844.10 million 33.90 $344.10 million $1.82 82.78
Gold Reserve $1.60 million 96.28 -$13.15 million N/A N/A

Franco Nevada has higher revenue and earnings than Gold Reserve.

Insider and Institutional Ownership

66.5% of Franco Nevada shares are held by institutional investors. 12.8% of Gold Reserve shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

Franco Nevada beats Gold Reserve on 11 of the 15 factors compared between the two stocks.

About Franco Nevada

Franco-Nevada Corporation operates as a gold-focused royalty and stream company in the United States, Canada, Latin America, Australia, and Africa. It also holds interests in silver and platinum group metals; and oil, gas, and natural gas liquids. The company was incorporated in 2007 and is headquartered in Toronto, Canada.

About Gold Reserve

Gold Reserve Inc., an exploration stage company, acquires, explores, and develops mineral properties. The company primarily focuses on the Siembra Minera Project, an open pit gold-copper mining project located in Bolivar, Venezuela. It also has an interest in the LMS Gold Project in Alaska. The company was founded in 1956 and is based in Spokane, Washington.

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