Rio Tinto (NYSE: RIO) and Nexa Resources (NYSE:NEXA) are both mid-cap basic materials companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, analyst recommendations, earnings, valuation, institutional ownership, dividends and profitability.

Profitability

This table compares Rio Tinto and Nexa Resources’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Rio Tinto N/A N/A N/A
Nexa Resources 2.88% 2.16% 1.09%

Insider & Institutional Ownership

7.2% of Rio Tinto shares are held by institutional investors. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Rio Tinto and Nexa Resources’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Rio Tinto $33.78 billion 2.04 $4.62 billion $3.43 14.90
Nexa Resources $1.91 billion 1.12 $93.16 million $0.51 37.27

Rio Tinto has higher revenue and earnings than Nexa Resources. Rio Tinto is trading at a lower price-to-earnings ratio than Nexa Resources, indicating that it is currently the more affordable of the two stocks.

Dividends

Rio Tinto pays an annual dividend of $2.37 per share and has a dividend yield of 4.6%. Nexa Resources does not pay a dividend. Rio Tinto pays out 69.1% of its earnings in the form of a dividend.

Analyst Ratings

This is a summary of recent recommendations for Rio Tinto and Nexa Resources, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Rio Tinto 1 6 8 0 2.47
Nexa Resources 0 0 5 0 3.00

Rio Tinto currently has a consensus target price of $50.12, suggesting a potential downside of 1.89%. Nexa Resources has a consensus target price of $21.52, suggesting a potential upside of 13.20%. Given Nexa Resources’ stronger consensus rating and higher probable upside, analysts clearly believe Nexa Resources is more favorable than Rio Tinto.

About Rio Tinto

Rio Tinto plc is a mining and metals company. The Company’s business is finding, mining and processing mineral resources. The Company’s segments include Iron Ore, Aluminium, Copper & Diamonds, Energy & Minerals and Other Operations. The Company operates an iron ore business, supplying the global seaborne iron ore trade. Its Iron Ore product operations are located in the Pilbara region of Western Australia. The Aluminium business includes bauxite mines, alumina refineries and aluminum smelters. Its bauxite mines are located in Australia, Brazil and Guinea. The Copper & Diamonds segment has managed operations in Australia, Canada, Mongolia and the United States, and non-managed operations in Chile and Indonesia. The Energy & Minerals segment consists of mining, refining and marketing operations in over 10 countries, across six sectors: borates, coal, iron ore concentrate and pellets, salt, titanium dioxide and uranium.

About Nexa Resources

Nexa Resources SA, formerly VM Holding SA, is a Luxembourg-based company engaged in the mineral resources industry. The Company is a metals and mining entity mainly engaged in zinc content production, and whose product portfolio also includes copper, lead, silver and gold. Its mining and smelting presence is located in Brazil, conducted by Votorantim Metais Zinco SA, and in Peru, conducted by Compania Minera Milpo SAA, and Votorantim Metais-Cajamarquilla SA. Its controlling shareholder is Votorantim SA, a Brazilian privately owned industrial conglomerate that holds ownership interests in metal, steel, cement, energy and pulp companies, among others.

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