Comparing Amerigo Resources (ARREF) & Vale (VALE)

Amerigo Resources (OTCMKTS: ARREF) and Vale (NYSE:VALE) are both basic materials companies, but which is the superior stock? We will contrast the two businesses based on the strength of their dividends, valuation, risk, profitability, analyst recommendations, earnings and institutional ownership.

Profitability

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This table compares Amerigo Resources and Vale’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Amerigo Resources 5.96% 8.73% 3.56%
Vale 16.21% 16.63% 6.91%

Analyst Recommendations

This is a summary of recent recommendations for Amerigo Resources and Vale, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Amerigo Resources 0 0 0 0 N/A
Vale 0 7 8 0 2.53

Vale has a consensus price target of $14.28, suggesting a potential upside of 6.23%. Given Vale’s higher probable upside, analysts plainly believe Vale is more favorable than Amerigo Resources.

Risk and Volatility

Amerigo Resources has a beta of 2.19, meaning that its share price is 119% more volatile than the S&P 500. Comparatively, Vale has a beta of 1.64, meaning that its share price is 64% more volatile than the S&P 500.

Earnings & Valuation

This table compares Amerigo Resources and Vale’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Amerigo Resources $134.03 million 1.08 $7.98 million $0.04 20.46
Vale $33.97 billion 2.06 $5.51 billion $1.35 9.96

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

Dividends

Vale pays an annual dividend of $0.25 per share and has a dividend yield of 1.9%. Amerigo Resources does not pay a dividend. Vale pays out 18.5% of its earnings in the form of a dividend.

Insider and Institutional Ownership

19.1% of Vale shares are owned by institutional investors. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Vale beats Amerigo Resources on 11 of the 14 factors compared between the two stocks.

About Amerigo Resources

Amerigo Resources Ltd., through its subsidiary, Minera Valle Central S.A., produces and sells copper and molybdenum concentrates in Chile. The company was formerly known as Golden Temple Mining Corp. and changed its name to Amerigo Resources Ltd. in March 2002. Amerigo Resources Ltd. was founded in 1984 and is headquartered in Vancouver, Canada.

About Vale

Vale S.A. is a global producer of iron ore and iron ore pellets, key raw materials for steelmaking, and producer of nickel. The Company also produces copper, metallurgical and thermal coal, potash, phosphates and other fertilizer nutrients, manganese ore, ferroalloys, platinum group metals, gold, silver and cobalt. The Company’s segments include Ferrous minerals, which comprises the production and extraction of ferrous minerals, as iron ore fines, iron ore pellets and its logistic services, manganese and ferroalloys and others ferrous products and services; Coal, which comprises the extraction of metallurgical and thermal coal and its logistic services; Base metals, which includes the production and extraction of non-ferrous minerals, and are presented as nickel and its byproducts, and copper (copper concentrated), and Others, which comprises sales and expenses of other products, services and investments in joint ventures and associate in other business.

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