Critical Analysis: OR Royalties (NYSE:OR) and Largo (NYSE:LGO)

OR Royalties (NYSE:OR) and Largo (NYSE:LGO) are both materials companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, dividends, institutional ownership, earnings, valuation, risk and analyst recommendations.

Analyst Recommendations

This is a breakdown of current ratings and target prices for OR Royalties and Largo, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
OR Royalties	0	4	4	1	2.67
Largo	0	0	2	0	3.00

OR Royalties currently has a consensus target price of $41.00, indicating a potential upside of 15.38%. Largo has a consensus target price of $2.10, indicating a potential upside of 370.54%. Given Largo’s stronger consensus rating and higher possible upside, analysts plainly believe Largo is more favorable than OR Royalties.

Earnings and Valuation

This table compares OR Royalties and Largo”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
OR Royalties	$277.37 million	23.88	$206.09 million	$1.50	23.69
Largo	$127.06 million	0.40	-$30.34 million	($1.07)	-0.42

OR Royalties has higher revenue and earnings than Largo. Largo is trading at a lower price-to-earnings ratio than OR Royalties, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

OR Royalties has a beta of 0.78, meaning that its stock price is 22% less volatile than the S&P 500. Comparatively, Largo has a beta of 1.5, meaning that its stock price is 50% more volatile than the S&P 500.

Institutional & Insider Ownership

68.5% of OR Royalties shares are held by institutional investors. Comparatively, 64.1% of Largo shares are held by institutional investors. 0.3% of Largo 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.

Profitability

This table compares OR Royalties and Largo’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
OR Royalties	78.04%	16.41%	14.51%
Largo	-35.10%	-22.61%	-14.29%

Summary

OR Royalties beats Largo on 11 of the 15 factors compared between the two stocks.

About OR Royalties

Osisko Gold Royalties Ltd acquires and manages precious metal and other royalties, streams, and other interests in Canada and internationally. It also owns options on offtake; royalty/stream financings; and exclusive rights to participate in future royalty/stream financings on various projects. The company’s primary asset is a 3-5% net smelter return royalty on the Canadian Malartic complex located in Canada. In addition, it is involved in the exploration, evaluation, and development of mining projects. It primarily explores for precious metals, including gold, silver, diamond, and others. Osisko Gold Royalties Ltd was founded in 2014 and is headquartered in Montreal, Canada.

About Largo

Largo Inc. engages in the development and sale of vanadium-based energy storage systems in Canada. The company operates through, Sales & Trading, Mine Properties, Corporate, Exploration and Evaluation Properties, and Largo Clean Energy and Largo Physical Vanadium Segments. Its products include VPURE+ vanadium flakes that are used in the production of master alloys and aerospace applications; VPURE vanadium flakes ferrovanadium and vanadium carbon nitride for the steel industry; and VPURE+ vanadium powder for catalyst applications. The company offers renewable energy storage solutions through Largo Clean Energy. Its products are sourced from vanadium deposits at the Maracás Menchen Mine in Brazil. The company was formerly known as Largo Resources Ltd. and changed its name to Largo Inc. in November 2021. The company was incorporated in 1988 and is headquartered in Toronto, Canada.