Head to Head Analysis: Royal Gold (NASDAQ:RGLD) and Sandstorm Gold (NYSE:SAND)

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

Analyst Ratings

This is a breakdown of current recommendations for Royal Gold and Sandstorm Gold, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Royal Gold	0	3	5	0	2.63
Sandstorm Gold	1	2	4	0	2.43

Royal Gold presently has a consensus target price of $198.63, indicating a potential upside of 3.63%. Sandstorm Gold has a consensus target price of $10.15, indicating a potential downside of 15.20%. Given Royal Gold’s stronger consensus rating and higher probable upside, analysts clearly believe Royal Gold is more favorable than Sandstorm Gold.

Risk & Volatility

Royal Gold has a beta of 0.43, indicating that its stock price is 57% less volatile than the S&P 500. Comparatively, Sandstorm Gold has a beta of 0.52, indicating that its stock price is 48% less volatile than the S&P 500.

Insider & Institutional Ownership

83.7% of Royal Gold shares are held by institutional investors. Comparatively, 52.0% of Sandstorm Gold shares are held by institutional investors. 0.5% of Royal Gold shares are held by insiders. Comparatively, 1.5% of Sandstorm Gold shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Royal Gold pays an annual dividend of $1.80 per share and has a dividend yield of 0.9%. Sandstorm Gold pays an annual dividend of $0.06 per share and has a dividend yield of 0.5%. Royal Gold pays out 26.4% of its earnings in the form of a dividend. Sandstorm Gold pays out 50.0% 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. Royal Gold has raised its dividend for 25 consecutive years. Royal Gold is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Royal Gold	56.24%	13.30%	12.32%
Sandstorm Gold	17.78%	2.38%	1.87%

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Royal Gold	$719.40 million	17.54	$332.02 million	$6.82	28.10
Sandstorm Gold	$176.28 million	20.03	$14.29 million	$0.12	99.75

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

Summary

Royal Gold beats Sandstorm Gold on 13 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 Sandstorm Gold

Sandstorm Gold Ltd. operates as a gold royalty company. The company focuses on acquiring royalties and gold and other metals purchase agreements from companies that have advanced stage operating mines. It offers upfront payments for companies to acquire a stream and receives the right to purchase a percentage of a mine's production for the life of the mine. The company has a portfolio of 243 streams and royalties. It primarily has operations in Canada, Mexico, the United States, Mongolia, Burkina Faso, Ecuador, South Africa, Ghana, Botswana, Cote D'Ivoire, Argentina, Brazil, Chile, Peru, Egypt, Ethiopia, Guyana, Paraguay, French Guiana, Turkey, Sweden, Fiji, and Australia. The company was formerly known as Sandstorm Resources Ltd. and changed its name to Sandstorm Gold Ltd. in February 2011. Sandstorm Gold Ltd. was incorporated in 2007 and is headquartered in Vancouver, Canada.