Pan American Silver (NYSE:PAAS) versus Outokumpu (OTCMKTS:OUTKY) Critical Analysis

Outokumpu (OTCMKTS:OUTKY) and Pan American Silver (NYSE:PAAS) are both materials companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitability, dividends, valuation, institutional ownership, analyst recommendations, earnings and risk.

Insider & Institutional Ownership

55.4% of Pan American Silver shares are owned by institutional investors. 12.9% of Pan American Silver shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility & Risk

Outokumpu has a beta of 0.65, indicating that its share price is 35% less volatile than the S&P 500. Comparatively, Pan American Silver has a beta of 0.75, indicating that its share price is 25% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings for Outokumpu and Pan American Silver, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Outokumpu	0	4	1	0	2.20
Pan American Silver	0	3	7	0	2.70

Pan American Silver has a consensus price target of $67.71, indicating a potential upside of 78.38%. Given Pan American Silver’s stronger consensus rating and higher possible upside, analysts clearly believe Pan American Silver is more favorable than Outokumpu.

Earnings & Valuation

This table compares Outokumpu and Pan American Silver”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Outokumpu	$6.19 billion	0.37	-$155.00 million	($0.10)	-24.50
Pan American Silver	$3.62 billion	4.34	$978.00 million	$3.31	11.47

Pan American Silver has lower revenue, but higher earnings than Outokumpu. Outokumpu is trading at a lower price-to-earnings ratio than Pan American Silver, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Outokumpu and Pan American Silver’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Outokumpu	-1.48%	-2.38%	-1.41%
Pan American Silver	32.04%	20.01%	14.48%

Dividends

Outokumpu pays an annual dividend of $0.02 per share and has a dividend yield of 0.8%. Pan American Silver pays an annual dividend of $0.74 per share and has a dividend yield of 1.9%. Outokumpu pays out -20.0% of its earnings in the form of a dividend. Pan American Silver pays out 22.4% 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. Pan American Silver has raised its dividend for 2 consecutive years. Pan American Silver is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Pan American Silver beats Outokumpu on 15 of the 17 factors compared between the two stocks.

About Outokumpu

Outokumpu Oyj produces and sells various stainless steel products in Finland, other European countries, North America, the Asia-Pacific, and internationally. The company operates through three segments: Europe, Americas, and Ferrochrome. It offers cold rolled coils, strips, and sheets; hot rolled coils, strips, and plates; quarto plates; precision strips; and specialized components, such as welded stainless-steel I-beams, H-beams, hollow-section tubes, bent profiles, structural sections, hardened and customized press plates, suction roll shells, and blancs and disks. The company also provides stainless steel powder which includes Supra 316L, Dura 17-4PH, Ultra 904L, Therma 253MA, Dura 4116, and Ni-free austenitic stainless steel powder; and nickel-based alloys. Its products are used in various applications, including commercial kitchen, cooking, food industry, and home appliances; automotive and transportation; building and infrastructure; energy; marine; and heavy industries. The company was founded in 1910 and is headquartered in Helsinki, Finland.

About Pan American Silver

Pan American Silver Corp. engages in the exploration, mine development, extraction, processing, refining, and reclamation of silver, gold, zinc, lead, and copper mines in Canada, Mexico, Peru, Bolivia, Argentina, Chile, and Brazil. The company was formerly known as Pan American Minerals Corp. and changed its name to Pan American Silver Corp. in April 1995. Pan American Silver Corp. was incorporated in 1979 and is headquartered in Vancouver, Canada.