Analyzing Labrador Iron Ore Royalty (OTCMKTS:LIFZF) and Outokumpu Oyj (OTCMKTS:OUTKY)

Labrador Iron Ore Royalty (OTCMKTS:LIFZF) and Outokumpu Oyj (OTCMKTS:OUTKY) are both basic materials companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, earnings, risk, profitability, institutional ownership, dividends and valuation.

Insider and Institutional Ownership

32.4% of Labrador Iron Ore Royalty shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations and price targets for Labrador Iron Ore Royalty and Outokumpu Oyj, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Labrador Iron Ore Royalty	0	0	0	0	N/A
Outokumpu Oyj	0	3	1	0	2.25

Labrador Iron Ore Royalty currently has a consensus target price of $45.00, indicating a potential upside of 107.35%. Given Labrador Iron Ore Royalty’s higher possible upside, equities research analysts plainly believe Labrador Iron Ore Royalty is more favorable than Outokumpu Oyj.

Valuation and Earnings

This table compares Labrador Iron Ore Royalty and Outokumpu Oyj’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Labrador Iron Ore Royalty	N/A	N/A	N/A	$2.37	9.16
Outokumpu Oyj	$7.53 billion	N/A	-$114.72 million	($0.11)	-18.00

Labrador Iron Ore Royalty has higher earnings, but lower revenue than Outokumpu Oyj. Outokumpu Oyj is trading at a lower price-to-earnings ratio than Labrador Iron Ore Royalty, indicating that it is currently the more affordable of the two stocks.

Dividends

Labrador Iron Ore Royalty pays an annual dividend of $0.50 per share and has a dividend yield of 2.3%. Outokumpu Oyj pays an annual dividend of $0.06 per share and has a dividend yield of 3.0%. Labrador Iron Ore Royalty pays out 21.1% of its earnings in the form of a dividend. Outokumpu Oyj pays out -54.5% 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. Outokumpu Oyj is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Labrador Iron Ore Royalty and Outokumpu Oyj’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Labrador Iron Ore Royalty	N/A	N/A	N/A
Outokumpu Oyj	-1.52%	-2.74%	-1.73%

Summary

Labrador Iron Ore Royalty beats Outokumpu Oyj on 7 of the 11 factors compared between the two stocks.

About Labrador Iron Ore Royalty

Labrador Iron Ore Royalty Corporation, through its subsidiary, Hollinger-Hanna Limited, holds a 15.10% equity interest in Iron Ore Company of Canada (IOC) that produces and processes iron ores at Labrador City, Newfoundland and Labrador. Its primary products include standard and low silica acid, flux, and direct reduction pellets; iron ore concentrate; and seaborne iron ore pellets. The company was formerly known as Labrador Iron Ore Royalty Income Fund and changed its name to Labrador Iron Ore Royalty Corporation in July 2010. The company is based in Toronto, Canada.

About Outokumpu Oyj

Outokumpu Oyj produces and sells various stainless steel products in Finland, other European countries, North America, the Asia-Pacific, and internationally. The company operates through three segments: Europe, Americas, and Ferrochrome. It offers cold rolled coils, strips, and sheets; hot rolled coils, strips, and plates; quarto plates; precision strips; and specialized components, such as welded stainless-steel I-beams, H-beams, hollow-section tubes, bent profiles, structural sections, hardened and customized press plates, suction roll shells, and blancs and disks. The company also provides stainless steel powder which includes Supra 316L, Dura 17-4PH, Ultra 904L, Therma 253MA, Dura 4116, and Ni-free austenitic stainless steel powder; and nickel-based alloys. Its products are used in various applications, including commercial kitchen, cooking, food industry, and home appliances; automotive and transportation; building and infrastructure; energy; marine; and heavy industries. The company was founded in 1910 and is headquartered in Helsinki, Finland.