Critical Analysis: Reliance (NYSE:RS) & MP Materials (NYSE:MP)

MP Materials (NYSE:MP) and Reliance (NYSE:RS) are both large-cap basic materials companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, valuation, risk, earnings, dividends, profitability and analyst recommendations.

Earnings & Valuation

This table compares MP Materials and Reliance”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MP Materials	$203.85 million	60.44	-$65.42 million	($0.63)	-119.63
Reliance	$13.84 billion	1.12	$875.20 million	$13.70	21.44

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

Profitability

This table compares MP Materials and Reliance’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MP Materials	-41.87%	-9.34%	-4.17%
Reliance	5.39%	10.48%	7.37%

Risk & Volatility

MP Materials has a beta of 2.3, suggesting that its share price is 130% more volatile than the S&P 500. Comparatively, Reliance has a beta of 0.89, suggesting that its share price is 11% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for MP Materials and Reliance, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MP Materials	0	4	5	0	2.56
Reliance	1	2	2	0	2.20

MP Materials presently has a consensus price target of $60.6250, indicating a potential downside of 19.56%. Reliance has a consensus price target of $323.50, indicating a potential upside of 10.12%. Given Reliance’s higher possible upside, analysts plainly believe Reliance is more favorable than MP Materials.

Institutional and Insider Ownership

52.6% of MP Materials shares are owned by institutional investors. Comparatively, 79.3% of Reliance shares are owned by institutional investors. 9.5% of MP Materials shares are owned by insiders. Comparatively, 0.4% of Reliance shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

Reliance beats MP Materials on 9 of the 14 factors compared between the two stocks.

About MP Materials

MP Materials Corp., together with its subsidiaries, produces rare earth materials. The company owns and operates the Mountain Pass Rare Earth mine and processing facility in North America. It holds the mineral rights to the Mountain Pass mine and surrounding areas, as well as intellectual property rights related to the processing and development of rare earth minerals. The company was founded in 2017 and is headquartered in Las Vegas, Nevada.

About Reliance

Reliance, Inc. operates as a diversified metal solutions provider and the metals service center company in the United States, Canada, and internationally. The company distributes a line of approximately 100,000 metal products, including alloy, aluminum, brass, copper, carbon steel, stainless steel, titanium, and specialty steel products; and provides metals processing services to general manufacturing, non-residential construction, transportation, aerospace, energy, electronics and semiconductor fabrication, and heavy industries. It sells its products directly to original equipment manufacturers, which primarily include small machine shops and fabricators. The company was formerly known as Reliance Steel & Aluminum Co. and changed its name to Reliance, Inc. in February 2024. Reliance, Inc. was founded in 1939 and is based in Scottsdale, Arizona.