Critical Analysis: Teck Resources (NYSE:TECK) versus North American Construction Group (NYSE:NOA)

North American Construction Group (NYSE:NOA) and Teck Resources (NYSE:TECK) are both materials companies, but which is the better stock? We will contrast the two companies based on the strength of their valuation, risk, earnings, institutional ownership, profitability, dividends and analyst recommendations.

Profitability

This table compares North American Construction Group and Teck Resources’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
North American Construction Group	2.41%	6.23%	1.50%
Teck Resources	25.15%	12.21%	7.13%

Institutional & Insider Ownership

75.0% of North American Construction Group shares are held by institutional investors. Comparatively, 78.1% of Teck Resources shares are held by institutional investors. 9.7% of North American Construction Group shares are held by insiders. Comparatively, 0.1% of Teck Resources shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares North American Construction Group and Teck Resources”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
North American Construction Group	$919.14 million	0.35	$24.22 million	$0.79	14.95
Teck Resources	$7.70 billion	3.93	$1.00 billion	$5.59	11.21

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

Risk and Volatility

North American Construction Group has a beta of 1.06, suggesting that its share price is 6% more volatile than the S&P 500. Comparatively, Teck Resources has a beta of 1.01, suggesting that its share price is 1% more volatile than the S&P 500.

Dividends

North American Construction Group pays an annual dividend of $0.34 per share and has a dividend yield of 2.9%. Teck Resources pays an annual dividend of $0.36 per share and has a dividend yield of 0.6%. North American Construction Group pays out 43.0% of its earnings in the form of a dividend. Teck Resources pays out 6.4% 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. North American Construction Group has increased its dividend for 3 consecutive years. North American Construction Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for North American Construction Group and Teck Resources, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
North American Construction Group	0	4	3	0	2.43
Teck Resources	0	10	6	0	2.38

North American Construction Group currently has a consensus target price of $25.75, indicating a potential upside of 118.07%. Teck Resources has a consensus target price of $75.25, indicating a potential upside of 20.10%. Given North American Construction Group’s stronger consensus rating and higher possible upside, equities research analysts clearly believe North American Construction Group is more favorable than Teck Resources.

Summary

Teck Resources beats North American Construction Group on 10 of the 17 factors compared between the two stocks.

About North American Construction Group

North American Construction Group Ltd. provides mining and heavy civil construction services to customers in the resource development and industrial construction sectors in Australia, Canada, and the United States. The company operates Heavy Equipment – Canada, Heavy Equipment – Australia, and Other segments. It also offers mine management services for thermal coal mines; and construction and operations support services in the Canadian oil sands region. In addition, the company provides fully maintained heavy equipment rentals and full service mine operations support at metallurgical and thermal coal mines; heavy equipment rentals to iron ore, gold and lithium producers; and heavy equipment maintenance, component remanufacturing, and full equipment rebuild services to mining companies and other heavy equipment operators, as well as supplies production-critical components to the mining and construction industry. As of December 31, 2023, it operated a heavy equipment fleet of 900 units. The company was formerly known as North American Energy Partners Inc. and changed its name to North American Construction Group Ltd. in April 2018. North American Construction Group Ltd. was incorporated in 1953 and is headquartered in Acheson, Canada.

About Teck Resources

Teck Resources Limited engages in exploring for, acquiring, developing, and producing natural resources in Asia, Europe, and North America. The company operates through Steelmaking Coal, Copper, Zinc, and Energy segments. Its principal products include copper, zinc, steelmaking coal, and blended bitumen. The company also produces lead, silver, and molybdenum; and various specialty and other metals, chemicals, and fertilizers. In addition, it explores for gold. The company was formerly known as Teck Cominco Limited and changed its name to Teck Resources Limited in April 2009. The company was founded in 1913 and is headquartered in Vancouver, Canada.