Franco-Nevada (NYSE:FNV) and Royal Gold (NASDAQ:RGLD) Head to Head Contrast

Franco-Nevada (NYSE:FNV) and Royal Gold (NASDAQ:RGLD) are both large-cap basic materials companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, risk, valuation, institutional ownership, profitability, analyst recommendations and dividends.

Dividends

Franco-Nevada pays an annual dividend of $1.52 per share and has a dividend yield of 0.7%. Royal Gold pays an annual dividend of $1.80 per share and has a dividend yield of 0.8%. Franco-Nevada pays out 31.9% of its earnings in the form of a dividend. Royal Gold pays out 24.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Franco-Nevada has raised its dividend for 2 consecutive years and Royal Gold has raised its dividend for 25 consecutive years. Royal Gold is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Franco-Nevada	59.48%	13.94%	13.12%
Royal Gold	55.99%	14.14%	12.42%

Volatility and Risk

Franco-Nevada has a beta of 0.48, meaning that its stock price is 52% less volatile than the S&P 500. Comparatively, Royal Gold has a beta of 0.49, meaning that its stock price is 51% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings for Franco-Nevada and Royal Gold, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Franco-Nevada	0	6	7	1	2.64
Royal Gold	1	2	8	0	2.64

Franco-Nevada currently has a consensus target price of $232.75, suggesting a potential upside of 11.77%. Royal Gold has a consensus target price of $234.60, suggesting a potential upside of 6.10%. Given Franco-Nevada’s stronger consensus rating and higher probable upside, research analysts clearly believe Franco-Nevada is more favorable than Royal Gold.

Institutional & Insider Ownership

77.1% of Franco-Nevada shares are held by institutional investors. Comparatively, 83.7% of Royal Gold shares are held by institutional investors. 0.7% of Franco-Nevada shares are held by company insiders. Comparatively, 0.5% of Royal Gold shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Franco-Nevada and Royal Gold”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Franco-Nevada	$1.11 billion	36.05	$552.10 million	$4.77	43.66
Royal Gold	$719.40 million	25.94	$332.02 million	$7.28	30.37

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

Summary

Franco-Nevada beats Royal Gold on 10 of the 18 factors compared between the two stocks.

About Franco-Nevada

Franco-Nevada Corporation operates as a gold-focused royalty and streaming company in South America, Central America, Mexico, the United States, Canada, and internationally. It operates through Mining and Energy segments. The company manages its portfolio with a focus on precious metals, such as gold, silver, and platinum group metals; and engages in the sale of crude oil, natural gas, and natural gas liquids through a third-party marketing agent. Franco-Nevada Corporation was founded in 1986 and is headquartered in Toronto, Canada.

About Royal Gold

Royal Gold, Inc., together with its subsidiaries, acquires and manages precious metal streams, royalties, and related interests. The company engages in acquiring stream and royalty interests or to finance projects that are in production, development, or in the exploration stage in exchange for stream or royalty interests, which primarily consists of gold, silver, copper, nickel, zinc, lead, and other metals. Its stream and royalty interests on properties are located in the United States, Canada, Chile, the Dominican Republic, Australia, Africa, Mexico, Botswana, and internationally. Royal Gold, Inc. was incorporated in 1981 and is headquartered in Denver, Colorado.