Ferroglobe (NASDAQ:GSM) versus McEwen (NYSE:MUX) Financial Analysis

Ferroglobe (NASDAQ:GSM) and McEwen (NYSE:MUX) are both small-cap basic materials companies, but which is the superior stock? We will contrast the two businesses based on the strength of their profitability, institutional ownership, risk, valuation, analyst recommendations, dividends and earnings.

Institutional & Insider Ownership

89.6% of Ferroglobe shares are owned by institutional investors. Comparatively, 17.0% of McEwen shares are owned by institutional investors. 13.1% of Ferroglobe shares are owned by insiders. Comparatively, 14.8% of McEwen shares are owned 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.

Risk and Volatility

Ferroglobe has a beta of 1, meaning that its stock price has a similar volatility profile to the S&P 500.Comparatively, McEwen has a beta of 1.17, meaning that its stock price is 17% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Ferroglobe and McEwen, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ferroglobe	1	1	1	0	2.00
McEwen	0	2	4	0	2.67

Ferroglobe currently has a consensus price target of $6.00, suggesting a potential upside of 80.18%. McEwen has a consensus price target of $29.83, suggesting a potential upside of 66.06%. Given Ferroglobe’s higher probable upside, analysts clearly believe Ferroglobe is more favorable than McEwen.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Ferroglobe	-8.09%	-5.63%	-2.71%
McEwen	31.40%	13.65%	9.05%

Earnings & Valuation

This table compares Ferroglobe and McEwen”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ferroglobe	$1.34 billion	0.47	-$170.70 million	($0.60)	-5.55
McEwen	$235.91 million	4.55	$34.43 million	$1.18	15.22

McEwen has lower revenue, but higher earnings than Ferroglobe. Ferroglobe is trading at a lower price-to-earnings ratio than McEwen, indicating that it is currently the more affordable of the two stocks.

Dividends

Ferroglobe pays an annual dividend of $0.06 per share and has a dividend yield of 1.8%. McEwen pays an annual dividend of $0.01 per share and has a dividend yield of 0.1%. Ferroglobe pays out -10.0% of its earnings in the form of a dividend. McEwen pays out 0.8% 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. Ferroglobe has raised its dividend for 1 consecutive years. Ferroglobe is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

McEwen beats Ferroglobe on 11 of the 17 factors compared between the two stocks.

About Ferroglobe

Ferroglobe PLC produces and sells silicon metal, and silicon and manganese-based ferroalloys in the United States, Europe, and internationally. It provides silicone chemicals that are used in a range of applications, including personal care items, construction-related products, health care products, and electronics; and silicon metal for primary and secondary aluminum producers. The company also offers silicomanganese, which is used as deoxidizing agent in the steel manufacturing process; and ferromanganese that is used as a deoxidizing, desulphurizing, and degassing agent in the removal of nitrogen and other harmful elements from steel. In addition, it offers ferrosilicon products that are used to produce stainless steel, carbon steel, and various other steel alloys, as well as to manufacture electrodes and aluminum; calcium silicon, which is used in the deoxidation and desulfurization of liquid steel, and production of coatings for cast iron pipes, as well as in the welding process of powder metal and in pyrotechnics; and nodularizers and inoculants, which are used in the production of iron. Further, the company provides silica fume, a by-product of the electrometallurgical process of silicon metal and ferrosilicon. Additionally, it operates quartz mines in South Africa, Spain, the United States, and Canada; and low-ash metallurgical coal mines in the United States; and a charcoal production facility in South Africa, as well as holds interests in hydroelectric power plant in France. The company serves silicone chemical producers; aluminum and steel manufacturers; auto companies and their suppliers; ductile iron foundries; manufacturers of photovoltaic solar cells and computer chips; and concrete producers. Ferroglobe PLC was formerly known as VeloNewco Limited and changed its name to Ferroglobe PLC in December 2015. The company was incorporated in 2015 and is headquartered in London, the United Kingdom.

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.