Financial Analysis: Gold Royalty (NYSE:GROY) & Gold Resource (NYSE:GORO)

Gold Royalty (NYSE:GROY) and Gold Resource (NYSE:GORO) are both small-cap basic materials companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, earnings, valuation, institutional ownership, dividends, analyst recommendations and profitability.

Profitability

This table compares Gold Royalty and Gold Resource’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Gold Royalty	-381.76%	-0.53%	-0.40%
Gold Resource	-51.93%	-27.52%	-13.63%

Dividends

Gold Royalty pays an annual dividend of $0.01 per share and has a dividend yield of 0.7%. Gold Resource pays an annual dividend of $0.04 per share and has a dividend yield of 11.4%. Gold Royalty pays out -5.9% of its earnings in the form of a dividend. Gold Resource pays out -19.0% 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. Gold Resource is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

33.8% of Gold Royalty shares are owned by institutional investors. Comparatively, 18.4% of Gold Resource shares are owned by institutional investors. 2.7% of Gold Resource shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Volatility and Risk

Gold Royalty has a beta of 0.96, suggesting that its stock price is 4% less volatile than the S&P 500. Comparatively, Gold Resource has a beta of 1.45, suggesting that its stock price is 45% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings for Gold Royalty and Gold Resource, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gold Royalty	0	0	2	0	3.00
Gold Resource	0	0	1	0	3.00

Gold Royalty currently has a consensus target price of $3.67, suggesting a potential upside of 171.60%. Gold Resource has a consensus target price of $1.75, suggesting a potential upside of 399.71%. Given Gold Resource’s higher possible upside, analysts plainly believe Gold Resource is more favorable than Gold Royalty.

Valuation & Earnings

This table compares Gold Royalty and Gold Resource”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Gold Royalty	$6.50 million	35.11	-$26.76 million	($0.17)	-7.94
Gold Resource	$81.18 million	0.39	-$16.02 million	($0.21)	-1.67

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

Summary

Gold Resource beats Gold Royalty on 9 of the 15 factors compared between the two stocks.

About Gold Royalty

Gold Royalty Corp., a precious metals-focused royalty company, provides financing solutions to the metals and mining industry. It focuses on acquiring royalties, streams, and similar interests at varying stages of the mine life cycle to build a portfolio offering near, medium, and longer-term returns for its investors. Gold Royalty Corp. was incorporated in 2020 and is headquartered in Vancouver, Canada.

About Gold Resource

Gold Resource Corporation engages in the exploration, development, and production of gold and silver projects in Mexico and the United States. The company also explores for copper, lead, and zinc deposits. Its principal assets are the 100% owned Don David gold mine and Back Forty project covering approximately 1,304 hectares located in Menominee county, Michigan. The company was incorporated in 1998 and is headquartered in Denver, Colorado.