Largo (NYSE:LGO) & Royal Gold (NASDAQ:RGLD) Critical Analysis

Royal Gold (NASDAQ:RGLD) and Largo (NYSE:LGO) are both materials companies, but which is the better stock? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, profitability, dividends, risk and earnings.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Royal Gold	47.74%	12.06%	9.41%
Largo	-35.10%	-22.61%	-14.29%

Insider and Institutional Ownership

83.7% of Royal Gold shares are held by institutional investors. Comparatively, 64.1% of Largo shares are held by institutional investors. 0.3% of Royal Gold shares are held by insiders. Comparatively, 0.3% of Largo shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and target prices for Royal Gold and Largo, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Royal Gold	1	3	9	0	2.62
Largo	0	0	2	0	3.00

Royal Gold currently has a consensus price target of $289.64, suggesting a potential upside of 22.73%. Largo has a consensus price target of $2.10, suggesting a potential upside of 331.92%. Given Largo’s stronger consensus rating and higher probable upside, analysts plainly believe Largo is more favorable than Royal Gold.

Earnings and Valuation

This table compares Royal Gold and Largo”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Royal Gold	$1.03 billion	19.41	$467.27 million	$9.16	25.76
Largo	$127.06 million	0.40	-$30.34 million	($1.07)	-0.45

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

Volatility and Risk

Royal Gold has a beta of 0.5, suggesting that its stock price is 50% less volatile than the S&P 500. Comparatively, Largo has a beta of 1.52, suggesting that its stock price is 52% more volatile than the S&P 500.

Summary

Royal Gold beats Largo on 11 of the 14 factors compared between the two stocks.

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.

About Largo

Largo Inc. engages in the development and sale of vanadium-based energy storage systems in Canada. The company operates through, Sales & Trading, Mine Properties, Corporate, Exploration and Evaluation Properties, and Largo Clean Energy and Largo Physical Vanadium Segments. Its products include VPURE+ vanadium flakes that are used in the production of master alloys and aerospace applications; VPURE vanadium flakes ferrovanadium and vanadium carbon nitride for the steel industry; and VPURE+ vanadium powder for catalyst applications. The company offers renewable energy storage solutions through Largo Clean Energy. Its products are sourced from vanadium deposits at the Maracás Menchen Mine in Brazil. The company was formerly known as Largo Resources Ltd. and changed its name to Largo Inc. in November 2021. The company was incorporated in 1988 and is headquartered in Toronto, Canada.