Avalon Rare Metals (OTCMKTS:AVLNF) and Iamgold (NYSE:IAG) Critical Analysis

Avalon Rare Metals (OTCMKTS:AVLNF) and Iamgold (NYSE:IAG) are both materials companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, dividends, institutional ownership, profitability and valuation.

Volatility & Risk

Avalon Rare Metals has a beta of 0.75, indicating that its share price is 25% less volatile than the S&P 500. Comparatively, Iamgold has a beta of 1.39, indicating that its share price is 39% more volatile than the S&P 500.

Profitability

This table compares Avalon Rare Metals and Iamgold’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Avalon Rare Metals	-10,843.52%	-11.10%	-10.24%
Iamgold	31.40%	28.97%	20.87%

Earnings & Valuation

This table compares Avalon Rare Metals and Iamgold”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Avalon Rare Metals	$190,000.00	94.66	-$20.85 million	($118.88)	-0.03
Iamgold	$3.68 billion	2.88	$664.40 million	$1.98	9.46

Iamgold has higher revenue and earnings than Avalon Rare Metals. Avalon Rare Metals is trading at a lower price-to-earnings ratio than Iamgold, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Avalon Rare Metals and Iamgold, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Avalon Rare Metals	0	1	0	0	2.00
Iamgold	1	2	6	1	2.70

Iamgold has a consensus price target of $22.71, suggesting a potential upside of 21.32%. Given Iamgold’s stronger consensus rating and higher possible upside, analysts plainly believe Iamgold is more favorable than Avalon Rare Metals.

Institutional and Insider Ownership

47.1% of Iamgold shares are owned by institutional investors. 2.4% of Avalon Rare Metals shares are owned by company insiders. Comparatively, 0.2% of Iamgold shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Iamgold beats Avalon Rare Metals on 13 of the 15 factors compared between the two stocks.

About Avalon Rare Metals

Avalon Advanced Materials Inc., together with its subsidiaries, engages in the acquisition, exploration, evaluation, and development of rare metal and mineral properties primarily in Canada. The company focuses on exploring lithium, tantalum, cesium, indium, gallium, germanium, tin, yttrium, and zirconium deposits, as well as rare earth elements. Its flagship project is the 100% owned Separation Rapids Lithium Project consisting of nineteen mineral claims and one mining lease covering an area of approximately 4,414 hectares located in the Paterson Lake Area, Kenora Mining Division, Ontario. The company was formerly known as Avalon Rare Metals Inc. and changed its name to Avalon Advanced Materials Inc. in February 2016. Avalon Advanced Materials Inc. is headquartered in Toronto, Canada.

About Iamgold

IAMGOLD Corporation, through its subsidiaries, operates as an intermediate gold producer and developer in Canada and Burkina Faso. It owns 100% interest in the Westwood project that covers an area of 1,925 hectare and located in Quebec; a 60% interest in the Côté gold project, which covers an area of 596 square kilometer located in Ontario, Canada; and a 90% interests in the Essakane project that covers an area of 274,000 square kilometer situated in Burkina Faso. IAMGOLD Corporation was incorporated in 1990 and is headquartered in Toronto, Canada.