Analyzing BHP Billiton (BBL) and Nexa Resources (NEXA)

BHP Billiton (NYSE: BBL) and Nexa Resources (NYSE:NEXA) are both mid-cap basic materials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, earnings, dividends, valuation, profitability and institutional ownership.

Dividends

BHP Billiton pays an annual dividend of $1.66 per share and has a dividend yield of 3.7%. Nexa Resources does not pay a dividend. BHP Billiton pays out 75.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Insider & Institutional Ownership

4.4% of BHP Billiton shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares BHP Billiton and Nexa Resources’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
BHP Billiton $38.29 billion 1.23 $5.89 billion $2.21 20.24
Nexa Resources $1.91 billion 1.23 $93.16 million $0.58 35.95

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

Profitability

This table compares BHP Billiton and Nexa Resources’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
BHP Billiton N/A N/A N/A
Nexa Resources 2.88% 2.16% 1.09%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for BHP Billiton and Nexa Resources, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BHP Billiton 0 1 1 0 2.50
Nexa Resources 0 0 5 0 3.00

BHP Billiton currently has a consensus price target of $40.00, suggesting a potential downside of 10.55%. Nexa Resources has a consensus price target of $21.52, suggesting a potential upside of 3.21%. Given Nexa Resources’ stronger consensus rating and higher probable upside, analysts clearly believe Nexa Resources is more favorable than BHP Billiton.

Summary

Nexa Resources beats BHP Billiton on 8 of the 14 factors compared between the two stocks.

About BHP Billiton

BHP Billiton Plc is a global resources company. The Company is a producer of various commodities, including iron ore, metallurgical coal, copper and uranium. Its segments include Petroleum, Copper, Iron Ore and Coal. The Petroleum segment is engaged in the exploration, development and production of oil and gas. The Copper segment is engaged in mining of copper, silver, lead, zinc, molybdenum, uranium and gold. The Iron Ore segment is engaged in mining of iron ore. The Coal segment is engaged in mining of metallurgical coal and thermal (energy) coal. Its businesses include Minerals Australia, Minerals Americas, Petroleum and Marketing. It extracts and processes minerals, oil and gas from its production operations located primarily in Australia and the Americas. It manages product distribution through its global logistics chain, including freight and pipeline transportation. It sells its products through direct supply agreements with its customers and on global commodity exchanges.

About Nexa Resources

Nexa Resources SA, formerly VM Holding SA, is a Luxembourg-based company engaged in the mineral resources industry. The Company is a metals and mining entity mainly engaged in zinc content production, and whose product portfolio also includes copper, lead, silver and gold. Its mining and smelting presence is located in Brazil, conducted by Votorantim Metais Zinco SA, and in Peru, conducted by Compania Minera Milpo SAA, and Votorantim Metais-Cajamarquilla SA. Its controlling shareholder is Votorantim SA, a Brazilian privately owned industrial conglomerate that holds ownership interests in metal, steel, cement, energy and pulp companies, among others.

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