Freeport-McMoran (NYSE: FCX) and Rio Alto Mining (NYSE:RIOM) are both basic materials companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, risk, profitability, earnings, institutional ownership, valuation and dividends.

Profitability

This table compares Freeport-McMoran and Rio Alto Mining’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Freeport-McMoran 6.20% 13.35% 3.52%
Rio Alto Mining N/A N/A N/A

Insider and Institutional Ownership

68.1% of Freeport-McMoran shares are held by institutional investors. 1.3% of Freeport-McMoran shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Freeport-McMoran and Rio Alto Mining, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Freeport-McMoran 2 12 4 0 2.11
Rio Alto Mining 0 0 0 0 N/A

Freeport-McMoran currently has a consensus price target of $15.79, suggesting a potential upside of 5.11%. Given Freeport-McMoran’s higher probable upside, research analysts plainly believe Freeport-McMoran is more favorable than Rio Alto Mining.

Valuation and Earnings

This table compares Freeport-McMoran and Rio Alto Mining’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Freeport-McMoran $14.83 billion 1.47 -$4.32 billion $0.74 20.30
Rio Alto Mining N/A N/A N/A N/A N/A

Rio Alto Mining has lower revenue, but higher earnings than Freeport-McMoran.

Summary

Freeport-McMoran beats Rio Alto Mining on 8 of the 8 factors compared between the two stocks.

Freeport-McMoran Company Profile

Freeport-McMoRan Inc. (FCX) is a mining company. The Company operates through geographical assets with proven and probable reserves of copper, gold and molybdenum, and traded copper producer. The Company’s segments include refined copper products, copper in concentrate, gold, molybdenum, oil and other. The Company’s segments include the Morenci, Cerro Verde, Grasberg copper mines, the Rod & Refining operations and the United States (U.S.) Oil and Gas Operations. The Company has organized its operations into five divisions, which include North America copper mines, South America mining, Indonesia mining and Molybdenum mines. The Company’s portfolio of assets includes the Grasberg minerals district in Indonesia, copper and gold deposits, and mining operations in the Americas, including the large-scale Morenci minerals district in North America and the Cerro Verde operation in South America.

Rio Alto Mining Company Profile

Rio Alto Mining Limited is a Canada-based resource exploration company. The Company is engaged in the business of acquiring, exploring, developing and operating mineral resource properties in Peru. The Company is also engaged in the business of acquiring, exploring, and developing gold resources and advanced stage exploration projects in Peru and Latin America. The Company owns and operates the La Arena Mine and the Shahuindo Gold Projects in northern Peru. The Company is focused on the development of the 21,000 hectares La Arena gold / copper project, located in north central Peru. The La Arena Project consists of 20,673 hectares in 44 concessions located 480 kilometers north-northwest of Lima, the capital of Peru, and approximately 18 kilometers from Huamachuco.

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