Critical Review: Alderon Iron Ore (AXXDF) versus Hudbay Minerals (HBM)

Alderon Iron Ore (OTCMKTS:AXXDF) and Hudbay Minerals (NYSE:HBM) are both small-cap basic materials companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, analyst recommendations, valuation, profitability, dividends, institutional ownership and earnings.

Institutional and Insider Ownership

56.8% of Hudbay Minerals shares are owned by institutional investors. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Alderon Iron Ore and Hudbay Minerals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Alderon Iron Ore N/A -12.46% -9.32%
Hudbay Minerals 12.29% 7.26% 3.36%

Valuation and Earnings

This table compares Alderon Iron Ore and Hudbay Minerals’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Alderon Iron Ore N/A N/A -$74.90 million N/A N/A
Hudbay Minerals $1.36 billion 0.92 $163.89 million $0.57 8.42

Hudbay Minerals has higher revenue and earnings than Alderon Iron Ore.

Volatility & Risk

Alderon Iron Ore has a beta of -0.42, suggesting that its stock price is 142% less volatile than the S&P 500. Comparatively, Hudbay Minerals has a beta of 2.96, suggesting that its stock price is 196% more volatile than the S&P 500.

Dividends

Hudbay Minerals pays an annual dividend of $0.02 per share and has a dividend yield of 0.4%. Alderon Iron Ore does not pay a dividend. Hudbay Minerals pays out 3.5% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Alderon Iron Ore and Hudbay Minerals, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alderon Iron Ore 0 0 0 0 N/A
Hudbay Minerals 0 3 6 0 2.67

Hudbay Minerals has a consensus price target of $7.00, suggesting a potential upside of 45.83%. Given Hudbay Minerals’ higher possible upside, analysts plainly believe Hudbay Minerals is more favorable than Alderon Iron Ore.

Summary

Hudbay Minerals beats Alderon Iron Ore on 10 of the 11 factors compared between the two stocks.

Alderon Iron Ore Company Profile

Alderon Iron Ore Corp. engages in the acquisition, exploration, and development of mineral properties. Its principal asset is the Kami iron ore project that comprises 283 claim units covering an area of 7,075 hectares located in Western Labrador, Canada. The company was formerly known as Alderon Resource Corp. and changed its name to Alderon Iron Ore Corp. in September 2011. Alderon Iron Ore Corp. was incorporated in 1978 and is headquartered in Vancouver, Canada.

Hudbay Minerals Company Profile

Hudbay Minerals Inc., an integrated mining company, together with its subsidiaries, focuses on the discovery, production, and marketing of base and precious metals in North and South America. It produces copper concentrates containing copper, gold, and silver; and zinc metal. The company owns four polymetallic mines, four ore concentrators, and a zinc production facility in northern Manitoba and Saskatchewan, Canada, as well as in Cusco, Peru; and a copper project in Arizona, the United States. HudBay Minerals Inc. was founded in 1927 and is based in Toronto, Canada.

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