Critical Survey: Gold Resource (NYSE:GORO) vs. DRDGOLD (NYSE:DRD)

DRDGOLD (NYSE:DRD) and Gold Resource (NYSE:GORO) are both small-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.

Profitability

This table compares DRDGOLD and Gold Resource’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
DRDGOLD	N/A	N/A	N/A
Gold Resource	-22.30%	-19.21%	-10.17%

Institutional & Insider Ownership

14.7% of DRDGOLD shares are held by institutional investors. Comparatively, 18.4% of Gold Resource shares are held by institutional investors. 1.0% of DRDGOLD shares are held by insiders. Comparatively, 2.7% of Gold Resource shares are held by insiders. 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.

Risk and Volatility

DRDGOLD has a beta of 1.3, meaning that its share price is 30% more volatile than the S&P 500. Comparatively, Gold Resource has a beta of 1.53, meaning that its share price is 53% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for DRDGOLD and Gold Resource, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
DRDGOLD	0	0	1	0	3.00
Gold Resource	0	0	1	0	3.00

DRDGOLD currently has a consensus price target of $15.50, suggesting a potential upside of 75.94%. Gold Resource has a consensus price target of $1.50, suggesting a potential upside of 250.55%. Given Gold Resource’s higher probable upside, analysts clearly believe Gold Resource is more favorable than DRDGOLD.

Earnings & Valuation

This table compares DRDGOLD and Gold Resource’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
DRDGOLD	$309.85 million	2.46	$72.27 million	N/A	N/A
Gold Resource	$97.73 million	0.40	-$16.02 million	($0.21)	-2.04

DRDGOLD has higher revenue and earnings than Gold Resource.

Summary

DRDGOLD beats Gold Resource on 6 of the 10 factors compared between the two stocks.

About DRDGOLD

DRDGOLD Limited, a gold mining company, engages in the surface gold tailings retreatment business in South Africa. It also involved in the exploration, extraction, processing, and smelting activities. The company recovers gold from surface tailings in the Witwatersrand basin in Gauteng province. DRDGOLD Limited was formerly known as Durban Roodepoort Deep Limited and changed its name to DRDGOLD Limited in 2004. The company was incorporated in 1895 and is headquartered in Johannesburg, South Africa. DRDGOLD Limited is a subsidiary of Sibanye Gold Limited.

About Gold Resource

Gold Resource Corporation engages in the exploration, development, and production of gold and silver projects in Mexico and the United States. The company also explores for copper, lead, and zinc deposits. Its principal assets are the 100% owned Don David gold mine and Back Forty project covering approximately 1,304 hectares located in Menominee county, Michigan. The company was incorporated in 1998 and is headquartered in Denver, Colorado.