Franco-Nevada (NYSE:FNV) vs. Freeport-McMoRan (NYSE:FCX) Critical Comparison

Franco-Nevada (NYSE:FNV) and Freeport-McMoRan (NYSE:FCX) are both large-cap materials companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, earnings, analyst recommendations, valuation and profitability.

Volatility and Risk

Franco-Nevada has a beta of 0.36, suggesting that its stock price is 64% less volatile than the S&P 500. Comparatively, Freeport-McMoRan has a beta of 1.39, suggesting that its stock price is 39% more volatile than the S&P 500.

Profitability

This table compares Franco-Nevada and Freeport-McMoRan’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Franco-Nevada	63.79%	18.58%	17.19%
Freeport-McMoRan	11.39%	10.63%	5.69%

Earnings & Valuation

This table compares Franco-Nevada and Freeport-McMoRan”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Franco-Nevada	$1.82 billion	25.80	$1.11 billion	$7.65	31.87
Freeport-McMoRan	$25.91 billion	4.02	$2.20 billion	$2.03	35.70

Freeport-McMoRan has higher revenue and earnings than Franco-Nevada. Franco-Nevada is trading at a lower price-to-earnings ratio than Freeport-McMoRan, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Franco-Nevada and Freeport-McMoRan, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Franco-Nevada	0	5	9	0	2.64
Freeport-McMoRan	0	4	20	1	2.88

Franco-Nevada currently has a consensus price target of $267.80, indicating a potential upside of 9.83%. Freeport-McMoRan has a consensus price target of $76.22, indicating a potential upside of 5.17%. Given Franco-Nevada’s higher possible upside, equities research analysts plainly believe Franco-Nevada is more favorable than Freeport-McMoRan.

Insider & Institutional Ownership

77.1% of Franco-Nevada shares are owned by institutional investors. Comparatively, 80.8% of Freeport-McMoRan shares are owned by institutional investors. 0.7% of Franco-Nevada shares are owned by insiders. Comparatively, 0.7% of Freeport-McMoRan shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Franco-Nevada pays an annual dividend of $1.76 per share and has a dividend yield of 0.7%. Freeport-McMoRan pays an annual dividend of $0.30 per share and has a dividend yield of 0.4%. Franco-Nevada pays out 23.0% of its earnings in the form of a dividend. Freeport-McMoRan pays out 14.8% 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. Franco-Nevada has raised its dividend for 18 consecutive years. Franco-Nevada is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Freeport-McMoRan beats Franco-Nevada on 10 of the 18 factors compared between the two stocks.

About Franco-Nevada

Franco-Nevada Corporation operates as a gold-focused royalty and streaming company in South America, Central America, Mexico, the United States, Canada, and internationally. It operates through Mining and Energy segments. The company manages its portfolio with a focus on precious metals, such as gold, silver, and platinum group metals; and engages in the sale of crude oil, natural gas, and natural gas liquids through a third-party marketing agent. Franco-Nevada Corporation was founded in 1986 and is headquartered in Toronto, Canada.

About Freeport-McMoRan

Freeport-McMoRan Inc. engages in the mining of mineral properties in North America, South America, and Indonesia. It primarily explores for copper, gold, molybdenum, silver, and other metals. The company's assets include the Grasberg minerals district in Indonesia; Morenci, Bagdad, Safford, Sierrita, and Miami in Arizona; Chino and Tyrone in New Mexico; and Henderson and Climax in Colorado, North America, as well as Cerro Verde in Peru and El Abra in Chile. The company was formerly known as Freeport-McMoRan Copper & Gold Inc. and changed its name to Freeport-McMoRan Inc. in July 2014. Freeport-McMoRan Inc. was incorporated in 1987 and is headquartered in Phoenix, Arizona.