Vale (NYSE:VALE) versus Hudbay Minerals (NYSE:HBM) Critical Review

Hudbay Minerals (NYSE:HBM) and Vale (NYSE:VALE) are both basic materials companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, valuation, risk, profitability and institutional ownership.

Insider and Institutional Ownership

64.8% of Hudbay Minerals shares are held by institutional investors. Comparatively, 19.1% of Vale shares are held by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Hudbay Minerals and Vale’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hudbay Minerals 2.22% 3.07% 1.42%
Vale 10.03% 23.20% 11.25%

Valuation & Earnings

This table compares Hudbay Minerals and Vale’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Hudbay Minerals $1.47 billion 0.96 $85.42 million $0.39 13.87
Vale $36.58 billion 1.92 $6.86 billion $1.85 7.26

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

Analyst Ratings

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hudbay Minerals 0 5 3 0 2.38
Vale 2 11 3 0 2.06

Hudbay Minerals currently has a consensus price target of $8.38, indicating a potential upside of 54.81%. Vale has a consensus price target of $13.79, indicating a potential upside of 2.60%. Given Hudbay Minerals’ stronger consensus rating and higher possible upside, equities analysts plainly believe Hudbay Minerals is more favorable than Vale.

Volatility and Risk

Hudbay Minerals has a beta of 2.9, meaning that its stock price is 190% more volatile than the S&P 500. Comparatively, Vale has a beta of 1.07, meaning that its stock price is 7% 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%. Vale pays an annual dividend of $0.04 per share and has a dividend yield of 0.3%. Hudbay Minerals pays out 5.1% of its earnings in the form of a dividend. Vale pays out 2.2% 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.

Summary

Vale beats Hudbay Minerals on 8 of the 14 factors compared between the two stocks.

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 three polymetallic mines, four ore concentrators, and a zinc production facility in northern Manitoba and Saskatchewan, Canada, as well as in Cusco, Peru; and copper projects in Arizona and Nevada, the United States. HudBay Minerals Inc. was founded in 1927 and is based in Toronto, Canada.

Vale Company Profile

Vale S.A., together with its subsidiaries, produces and sells iron ore and iron ore pellets for use as raw materials in steelmaking in Brazil and internationally. It operates through Ferrous Minerals, Coal, and Base Metals segments. The Ferrous Minerals segment produces and extracts iron ore and pellets, manganese, ferroalloys, and others ferrous products and services; and provides related logistic services. The Coal segment is involved in the extraction of metallurgical and thermal coal; and provides related logistic services. The Base Metals segment produces and extracts non-ferrous minerals, including nickel; and its by-products, such as copper, gold, silver, cobalt, precious metals, and others. The company was formerly known as Companhia Vale do Rio Doce and changed its name to Vale S.A. in May 2009. Vale S.A. was founded in 1942 and is headquartered in Rio de Janeiro, Brazil.

Receive News & Ratings for Hudbay Minerals Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Hudbay Minerals and related companies with MarketBeat.com's FREE daily email newsletter.