Analyzing Gold Resource (NYSE:GORO) & Ternium (NYSE:TX)

Ternium (NYSE:TX) and Gold Resource (NYSE:GORO) are both materials companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, earnings, dividends, profitability, risk, institutional ownership and analyst recommendations.

Risk & Volatility

Ternium has a beta of 1.17, suggesting that its share price is 17% more volatile than the S&P 500. Comparatively, Gold Resource has a beta of 1.06, suggesting that its share price is 6% more volatile than the S&P 500.

Institutional and Insider Ownership

12.0% of Ternium shares are owned by institutional investors. Comparatively, 18.4% of Gold Resource shares are owned by institutional investors. 0.0% of Ternium shares are owned by insiders. Comparatively, 1.3% of Gold Resource shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

Ternium pays an annual dividend of $2.60 per share and has a dividend yield of 4.6%. Gold Resource pays an annual dividend of $0.04 per share and has a dividend yield of 1.2%. Ternium pays out 73.0% of its earnings in the form of a dividend. Gold Resource pays out 80.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ternium is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of current ratings and price targets for Ternium and Gold Resource, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ternium	0	4	6	1	2.73
Gold Resource	0	1	1	0	2.50

Ternium presently has a consensus target price of $55.72, indicating a potential downside of 1.23%. Gold Resource has a consensus target price of $1.75, indicating a potential downside of 46.91%. Given Ternium’s stronger consensus rating and higher probable upside, analysts clearly believe Ternium is more favorable than Gold Resource.

Profitability

This table compares Ternium and Gold Resource’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ternium	4.37%	4.26%	2.92%
Gold Resource	-61.31%	-35.25%	-16.15%

Valuation & Earnings

This table compares Ternium and Gold Resource”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ternium	$15.61 billion	0.72	$425.23 million	$3.56	15.85
Gold Resource	$55.34 million	9.64	-$16.02 million	$0.05	65.92

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

Summary

Ternium beats Gold Resource on 14 of the 17 factors compared between the two stocks.

About Ternium

Ternium S.A., together with its subsidiaries, manufactures and distributes steel products in Mexico, Southern Region, Brazil, and internationally. It operates through three segments: Steel, Mining, and Usiminas. The Steel segment offers slabs, hot and cold rolled products, coated products, roll formed and tubular products, bars, billets, and other products. Its Mining segment sells iron ore and pellets. The Usiminas segment offers iron ore extraction, steel transformation, and production of capital goods and logistics; and manufactures and sells various products and raw materials, such as flat steel, iron ore, and stamped steel parts for the automotive industry and products for the civil construction and capital goods industry. It also provides medical and social; scrap; renewable energy; and engineering and other services, as well as operates as a distribution company. In addition, the company engages in the exploration, exploitation, and pelletizing of iron ore. Ternium S.A. was founded in 1961 and is based in Luxembourg City, Luxembourg. Ternium S.A. is a subsidiary of Techint Holdings S.à r.l.

About Gold Resource

Gold Resource Corporation engages in the exploration, development, and production of gold and silver projects in Mexico and the United States. The company also explores for copper, lead, and zinc deposits. Its principal assets are the 100% owned Don David gold mine and Back Forty project covering approximately 1,304 hectares located in Menominee county, Michigan. The company was incorporated in 1998 and is headquartered in Denver, Colorado.