Critical Contrast: Tahoe Resources (TAHO) versus Fortuna Silver Mines (FSM)

Tahoe Resources (NYSE: TAHO) and Fortuna Silver Mines (NYSE:FSM) are both small-cap basic materials companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, valuation, analyst recommendations, risk, profitability, institutional ownership and earnings.

Insider & Institutional Ownership

64.1% of Tahoe Resources shares are held by institutional investors. Comparatively, 41.4% of Fortuna Silver Mines shares are held by institutional investors. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent recommendations and price targets for Tahoe Resources and Fortuna Silver Mines, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Tahoe Resources 0 5 3 0 2.38
Fortuna Silver Mines 0 1 3 0 2.75

Fortuna Silver Mines has a consensus price target of $6.00, indicating a potential upside of 8.30%. Given Fortuna Silver Mines’ stronger consensus rating and higher possible upside, analysts clearly believe Fortuna Silver Mines is more favorable than Tahoe Resources.

Profitability

This table compares Tahoe Resources and Fortuna Silver Mines’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Tahoe Resources 0.04% 0.07% 0.06%
Fortuna Silver Mines 24.53% 8.71% 7.04%

Risk and Volatility

Tahoe Resources has a beta of 0.22, meaning that its share price is 78% less volatile than the S&P 500. Comparatively, Fortuna Silver Mines has a beta of -0.02, meaning that its share price is 102% less volatile than the S&P 500.

Valuation and Earnings

This table compares Tahoe Resources and Fortuna Silver Mines’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Tahoe Resources $733.60 million 2.18 $81.79 million $0.27 18.96
Fortuna Silver Mines $268.11 million 3.30 $66.30 million $0.31 17.87

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

Summary

Fortuna Silver Mines beats Tahoe Resources on 7 of the 12 factors compared between the two stocks.

Tahoe Resources Company Profile

Tahoe Resources Inc., together with its subsidiaries, acquires, explores for, develops, and operates mineral properties in the Americas. It explores for silver, gold, lead, zinc, and copper deposits, as well as precious metals assets. The company holds interest in the La Arena gold mine located in the Huamachuco district of northern Peru; Shahuindo mine located in the province of Cajabamba in northern Peru; and La Arena II, a copper-gold porphyry deposit located in Peru. It also holds interest in the Timmins mines, including the Bell Creek and Timmins West mines, the Fenn-Gib project, the Juby project, the Vogel project, and the Gold River project located in Timmins, Ontario. The company was formerly known as CKM Resources Inc. and changed its name to Tahoe Resources Inc. in January 2010. Tahoe Resources Inc. was incorporated in 2009 and is headquartered in Reno, Nevada.

Fortuna Silver Mines Company Profile

Fortuna Silver Mines Inc. engages in the exploration, extraction, and processing of precious and base metal deposits in Latin America. It explores for silver, gold, lead, and zinc deposits. The company holds interests in the Caylloma mine located in southern Peru; and the San Jose mine situated in the state of Oaxaca in southern Mexico. It also develops the Lindero gold project located in northern Argentina. The company was formerly known as Fortuna Ventures Inc. and changed its name to Fortuna Silver Mines Inc. in June 2005. Fortuna Silver Mines Inc. was incorporated in 1990 and is based in Vancouver, Canada.

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