Critical Review: McEwen (NYSE:MUX) vs. Glencore (OTCMKTS:GLNCY)

Glencore (OTCMKTS:GLNCY) and McEwen (NYSE:MUX) are both basic materials companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, valuation, profitability, earnings, analyst recommendations, institutional ownership and dividends.

Volatility & Risk

Glencore has a beta of 0.66, indicating that its share price is 34% less volatile than the S&P 500. Comparatively, McEwen has a beta of 1.28, indicating that its share price is 28% more volatile than the S&P 500.

Profitability

This table compares Glencore and McEwen’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Glencore	N/A	N/A	N/A
McEwen	17.43%	6.89%	4.54%

Analyst Ratings

This is a breakdown of current recommendations for Glencore and McEwen, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Glencore	0	3	6	1	2.80
McEwen	1	1	4	0	2.50

Glencore presently has a consensus target price of $9.30, indicating a potential downside of 36.52%. McEwen has a consensus target price of $29.83, indicating a potential upside of 25.32%. Given McEwen’s higher probable upside, analysts plainly believe McEwen is more favorable than Glencore.

Valuation and Earnings

This table compares Glencore and McEwen”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Glencore	$247.54 billion	0.35	$363.00 million	N/A	N/A
McEwen	$197.55 million	7.16	$34.43 million	$0.59	40.35

Glencore has higher revenue and earnings than McEwen.

Institutional and Insider Ownership

0.1% of Glencore shares are held by institutional investors. Comparatively, 17.0% of McEwen shares are held by institutional investors. 16.1% of McEwen shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

McEwen beats Glencore on 8 of the 13 factors compared between the two stocks.

About Glencore

Glencore plc engages in the production, refinement, processing, storage, transport, and marketing of metals and minerals, and energy products in the Americas, Europe, Asia, Africa, and Oceania. It operates through two segments: Marketing Activities and Industrial Activities. The company engages in production and marketing copper, cobalt, lead, nickel, zinc, chrome ore, ferrochrome, vanadium, aluminum, alumina, and iron ore; and coal, crude oil, refined products, and natural gas, as well as oil exploration/production and refining/distribution. It also operates marketing and distribution of physical commodities sourced from third party producers and company’s production to industrial consumers, including the battery, electronic, construction, automotive, steel, energy, and oil industries. In addition, the company provides financing, logistics, and other services to producers and consumers of commodities. Glencore plc was founded in 1974 and is headquartered in Baar, Switzerland.

About McEwen

McEwen Mining Inc. engages in the exploration, development, production, and sale of gold and silver. It also explores for copper deposits. The company owns 100% interests in the El Gallo and Fenix projects located in Mexico; and the Black Fox Mine and Stock Mill, Grey Fox, and Froome and Tamarack properties in Canada. It also owns interests in the Fuller, Davidson-Tisdale, Buffalo Ankerite, and Paymaster exploration properties located in Canada; and a 49% interest in the San José mine located in Argentina. In addition, the company owns 100% interests in the Gold Bar and Tonkin properties located in Eureka County, Nevada; and interests in the Los Azules copper project located in the cordilleran region in the province of San Juan, Argentina. The company was formerly known as US Gold Corporation and changed its name to McEwen Mining Inc. in January 2012. McEwen Mining Inc. was founded in 1979 and is headquartered in Toronto, Canada.