Comparing Gold Resource (NYSE:GORO) & Centerra Gold (NYSE:CGAU)

Centerra Gold (NYSE:CGAU) and Gold Resource (NYSE:GORO) 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 valuation, analyst recommendations, earnings, risk, institutional ownership, profitability and dividends.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Centerra Gold	8.31%	10.34%	7.70%
Gold Resource	-61.31%	-35.25%	-16.15%

Dividends

Centerra Gold pays an annual dividend of $0.20 per share and has a dividend yield of 3.5%. Gold Resource pays an annual dividend of $0.04 per share and has a dividend yield of 17.4%. Centerra Gold pays out 41.7% of its earnings in the form of a dividend. Gold Resource pays out -8.2% 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. Gold Resource is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

55.4% of Centerra Gold shares are owned by institutional investors. Comparatively, 18.4% of Gold Resource shares are owned by institutional investors. 0.2% of Centerra Gold shares are owned by company insiders. Comparatively, 2.5% of Gold Resource shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Volatility and Risk

Centerra Gold has a beta of 0.89, indicating that its stock price is 11% less volatile than the S&P 500. Comparatively, Gold Resource has a beta of 1.6, indicating that its stock price is 60% more volatile than the S&P 500.

Valuation and Earnings

This table compares Centerra Gold and Gold Resource”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Centerra Gold	$1.25 billion	0.95	-$81.28 million	$0.48	11.85
Gold Resource	$73.90 million	0.30	-$16.02 million	($0.49)	-0.47

Gold Resource has lower revenue, but higher earnings than Centerra Gold. Gold Resource is trading at a lower price-to-earnings ratio than Centerra Gold, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current ratings and recommmendations for Centerra Gold and Gold Resource, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Centerra Gold	0	2	2	0	2.50
Gold Resource	0	0	1	0	3.00

Centerra Gold presently has a consensus target price of $11.00, suggesting a potential upside of 93.32%. Gold Resource has a consensus target price of $1.75, suggesting a potential upside of 660.54%. Given Gold Resource’s stronger consensus rating and higher possible upside, analysts clearly believe Gold Resource is more favorable than Centerra Gold.

Summary

Centerra Gold beats Gold Resource on 9 of the 16 factors compared between the two stocks.

About Centerra Gold

Centerra Gold Inc., a gold mining company, engages in the acquisition, exploration, development, and operation of gold and copper properties in North America, Turkey, and internationally. The company explores for gold, copper, and molybdenum deposits. Its flagship projects are the 100% owned Mount Milligan gold-copper mine located in British Columbia, Canada; and the Öksüt gold mine located in Turkey. The company was incorporated in 2002 and is based in Toronto, Canada.

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.