Critical Review: Gold Fields (NYSE:GFI) vs. Royal Gold (NASDAQ:RGLD)

Gold Fields (NYSE:GFI) and Royal Gold (NASDAQ:RGLD) are both large-cap basic materials companies, but which is the superior business? We will compare the two companies based on the strength of their risk, valuation, earnings, dividends, institutional ownership, profitability and analyst recommendations.

Analyst Ratings

This is a summary of current ratings and price targets for Gold Fields and Royal Gold, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gold Fields	2	4	5	0	2.27
Royal Gold	2	2	8	0	2.50

Gold Fields currently has a consensus target price of $49.75, suggesting a potential upside of 23.45%. Royal Gold has a consensus target price of $273.64, suggesting a potential upside of 19.85%. Given Gold Fields’ higher possible upside, research analysts clearly believe Gold Fields is more favorable than Royal Gold.

Volatility & Risk

Gold Fields has a beta of 0.64, meaning that its share price is 36% less volatile than the S&P 500. Comparatively, Royal Gold has a beta of 0.43, meaning that its share price is 57% less volatile than the S&P 500.

Valuation and Earnings

This table compares Gold Fields and Royal Gold”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Gold Fields	$8.75 billion	4.12	$3.57 billion	N/A	N/A
Royal Gold	$1.03 billion	18.80	$467.27 million	$8.39	27.21

Gold Fields has higher revenue and earnings than Royal Gold.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Gold Fields	N/A	N/A	N/A
Royal Gold	48.59%	12.63%	9.99%

Insider and Institutional Ownership

24.8% of Gold Fields shares are held by institutional investors. Comparatively, 83.7% of Royal Gold shares are held by institutional investors. 36.8% of Gold Fields shares are held by insiders. Comparatively, 0.4% of Royal Gold shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

Gold Fields pays an annual dividend of $1.20 per share and has a dividend yield of 3.0%. Royal Gold pays an annual dividend of $1.90 per share and has a dividend yield of 0.8%. Royal Gold pays out 22.6% of its earnings in the form of a dividend. Royal Gold has raised its dividend for 25 consecutive years.

Summary

Royal Gold beats Gold Fields on 8 of the 15 factors compared between the two stocks.

About Gold Fields

Gold Fields Limited operates as a gold producer with reserves and resources in Chile, South Africa, Ghana, Canada, Australia, and Peru. It also explores for copper and silver deposits. The company was founded in 1887 and is based in Sandton, South Africa.

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.