Head to Head Review: Franco Nevada (FNV) versus Agnico Eagle Mines (AEM)

Franco Nevada (NYSE:FNV) and Agnico Eagle Mines (NYSE:AEM) are both basic materials companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, earnings, risk, institutional ownership, profitability, analyst recommendations and valuation.

Earnings and Valuation

This table compares Franco Nevada and Agnico Eagle Mines’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Franco Nevada $675.00 million 18.11 $194.70 million $1.08 60.74
Agnico Eagle Mines $2.24 billion 3.79 $243.88 million $1.11 32.72

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

Analyst Ratings

This is a summary of current ratings and price targets for Franco Nevada and Agnico Eagle Mines, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Franco Nevada 0 6 4 0 2.40
Agnico Eagle Mines 0 2 12 0 2.86

Franco Nevada presently has a consensus target price of $87.86, suggesting a potential upside of 33.93%. Agnico Eagle Mines has a consensus target price of $54.45, suggesting a potential upside of 49.93%. Given Agnico Eagle Mines’ stronger consensus rating and higher possible upside, analysts plainly believe Agnico Eagle Mines is more favorable than Franco Nevada.

Profitability

This table compares Franco Nevada and Agnico Eagle Mines’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Franco Nevada 32.94% 4.80% 4.72%
Agnico Eagle Mines 4.60% 1.75% 1.07%

Dividends

Franco Nevada pays an annual dividend of $0.96 per share and has a dividend yield of 1.5%. Agnico Eagle Mines pays an annual dividend of $0.44 per share and has a dividend yield of 1.2%. Franco Nevada pays out 88.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Agnico Eagle Mines pays out 39.6% of its earnings in the form of a dividend. Franco Nevada has raised its dividend for 5 consecutive years and Agnico Eagle Mines has raised its dividend for 6 consecutive years.

Risk & Volatility

Franco Nevada has a beta of -0.13, indicating that its share price is 113% less volatile than the S&P 500. Comparatively, Agnico Eagle Mines has a beta of -0.59, indicating that its share price is 159% less volatile than the S&P 500.

Insider and Institutional Ownership

63.4% of Franco Nevada shares are owned by institutional investors. Comparatively, 59.7% of Agnico Eagle Mines shares are owned by institutional investors. 0.5% of Agnico Eagle Mines shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

Agnico Eagle Mines beats Franco Nevada on 9 of the 17 factors compared between the two stocks.

About Franco Nevada

Franco-Nevada Corporation operates as a gold-focused royalty and stream company in the United States, Canada, Mexico, Peru, Chile, Australia, and Africa. The company also holds interests in silver, platinum group metals, oil and gas, and other resource assets. As of December 31, 2017, it had a portfolio of 341 assets. The company was incorporated in 2007 and is headquartered in Toronto, Canada.

About Agnico Eagle Mines

Agnico Eagle Mines Limited engages in the exploration, development, and production of mineral properties in Canada, Mexico, and Finland. The company operates through Northern Business and Southern Business segments. It primarily produces and sells gold deposit, as well as explores for silver, zinc, and copper deposits. The company's flagship property is the LaRonde mine located in the Abitibi region of northwestern Quebec, Canada. As of December 31, 2017, Its LaRonde mine had a proven and probable mineral reserve of approximately 2.7 million ounces of gold. The company is also involved in exploration activities in Canada, Europe, Latin America, and the United States. Agnico Eagle Mines Limited was founded in 1953 and is headquartered in Toronto, Canada.

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