Financial Comparison: Royal Gold (NASDAQ:RGLD) & Harmony Gold Mining (NYSE:HMY)

Royal Gold (NASDAQ:RGLD) and Harmony Gold Mining (NYSE:HMY) are both basic materials companies, but which is the superior investment? We will compare the two companies based on the strength of their analyst recommendations, dividends, valuation, earnings, profitability, risk and institutional ownership.

Volatility & Risk

Royal Gold has a beta of 0.4, indicating that its stock price is 60% less volatile than the S&P 500. Comparatively, Harmony Gold Mining has a beta of 0.77, indicating that its stock price is 23% less volatile than the S&P 500.

Dividends

Royal Gold pays an annual dividend of $1.80 per share and has a dividend yield of 1.1%. Harmony Gold Mining pays an annual dividend of $0.19 per share and has a dividend yield of 1.2%. Royal Gold pays out 29.8% of its earnings in the form of a dividend. Harmony Gold Mining pays out 11.2% 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. Royal Gold has increased its dividend for 25 consecutive years. Harmony Gold Mining is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of recent recommendations for Royal Gold and Harmony Gold Mining, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Royal Gold	0	2	5	0	2.71
Harmony Gold Mining	0	4	0	0	2.00

Royal Gold presently has a consensus target price of $192.1250, suggesting a potential upside of 19.94%. Harmony Gold Mining has a consensus target price of $12.20, suggesting a potential downside of 23.20%. Given Royal Gold’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Royal Gold is more favorable than Harmony Gold Mining.

Earnings & Valuation

This table compares Royal Gold and Harmony Gold Mining”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Royal Gold	$719.40 million	14.66	$332.02 million	$6.04	26.52
Harmony Gold Mining	$3.31 billion	3.05	$459.40 million	$1.69	9.40

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

Profitability

This table compares Royal Gold and Harmony Gold Mining’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Royal Gold	52.15%	12.48%	11.52%
Harmony Gold Mining	N/A	N/A	N/A

Institutional & Insider Ownership

83.7% of Royal Gold shares are owned by institutional investors. Comparatively, 31.8% of Harmony Gold Mining shares are owned by institutional investors. 0.5% of Royal Gold shares are owned by company insiders. Comparatively, 16.0% of Harmony Gold Mining shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

Royal Gold beats Harmony Gold Mining on 11 of the 17 factors compared between the two stocks.

About Royal Gold

Royal Gold, Inc., together with its subsidiaries, acquires and manages precious metal streams, royalties, and related interests. The company engages in acquiring stream and royalty interests or to finance projects that are in production, development, or in the exploration stage in exchange for stream or royalty interests, which primarily consists of gold, silver, copper, nickel, zinc, lead, and other metals. Its stream and royalty interests on properties are located in the United States, Canada, Chile, the Dominican Republic, Australia, Africa, Mexico, Botswana, and internationally. Royal Gold, Inc. was incorporated in 1981 and is headquartered in Denver, Colorado.

About Harmony Gold Mining

Harmony Gold Mining Company Limited engages in the exploration, extraction, and processing of gold. The company explores for uranium, silver, copper, and molybdenum deposits. It has eight underground operations in the Witwatersrand Basin; an open-pit mine on the Kraaipan Greenstone Belt; and various surface source operations in South Africa. In addition, the company owns interests in the Hidden Valley, an open-pit gold and silver mine; and the Wafi-Golpu project located in Morobe Province in Papua New Guinea. Further, it holds interest in Rosby and Eva Copper Project located in Queensland, Australia. Harmony Gold Mining Company Limited was incorporated in 1950 and is headquartered in Randfontein, South Africa.