U.S. Silica Holdings (NYSE: SLCA) and Southern Copper Corporation (NYSE:SCCO) are both mid-cap basic materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, risk, profitabiliy, earnings, institutional ownership and dividends.
Volatility and Risk
U.S. Silica Holdings has a beta of 2.33, indicating that its stock price is 133% more volatile than the S&P 500. Comparatively, Southern Copper Corporation has a beta of 0.55, indicating that its stock price is 45% less volatile than the S&P 500.
This table compares U.S. Silica Holdings and Southern Copper Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|U.S. Silica Holdings||1.60%||1.92%||1.12%|
|Southern Copper Corporation||16.63%||16.35%||7.38%|
Valuation and Earnings
This table compares U.S. Silica Holdings and Southern Copper Corporation’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|U.S. Silica Holdings||$855.38 million||2.46||$124.18 million||$0.13||199.31|
|Southern Copper Corporation||$5.91 billion||5.13||$2.61 billion||$1.28||30.66|
Southern Copper Corporation has higher revenue and earnings than U.S. Silica Holdings. Southern Copper Corporation is trading at a lower price-to-earnings ratio than U.S. Silica Holdings, indicating that it is currently the more affordable of the two stocks.
This is a summary of current ratings and price targets for U.S. Silica Holdings and Southern Copper Corporation, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|U.S. Silica Holdings||1||2||17||0||2.80|
|Southern Copper Corporation||3||2||2||0||1.86|
U.S. Silica Holdings currently has a consensus price target of $53.61, indicating a potential upside of 106.89%. Southern Copper Corporation has a consensus price target of $33.75, indicating a potential downside of 14.01%. Given U.S. Silica Holdings’ stronger consensus rating and higher probable upside, research analysts clearly believe U.S. Silica Holdings is more favorable than Southern Copper Corporation.
Institutional and Insider Ownership
6.3% of Southern Copper Corporation shares are owned by institutional investors. 1.0% of U.S. Silica Holdings shares are owned by company insiders. Comparatively, 0.5% of Southern Copper Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
U.S. Silica Holdings pays an annual dividend of $0.25 per share and has a dividend yield of 1.0%. Southern Copper Corporation pays an annual dividend of $0.56 per share and has a dividend yield of 1.4%. U.S. Silica Holdings pays out 192.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Southern Copper Corporation pays out 43.8% of its earnings in the form of a dividend. Southern Copper Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.
Southern Copper Corporation beats U.S. Silica Holdings on 10 of the 16 factors compared between the two stocks.
U.S. Silica Holdings Company Profile
U.S. Silica Holdings, Inc. is a domestic producer of commercial silica, a specialized mineral that is an input into a range of end markets. The Company operates in two segments: Oil & Gas Proppants, and Industrial & Specialty Products. In the Oil & Gas Proppants segment, it serves the oil and gas recovery market providing fracturing sand, or frac sand, which is pumped down oil and natural gas wells to prop open rock fissures and manage the flow rate of natural gas and oil from the wells. As of December 31, 2016, the Industrial & Specialty Products segment consisted of over 215 products and materials, which are used in a range of industries, including container glass, fiberglass, specialty glass, flat glass, building products, fillers and extenders, foundry products, chemicals, recreation products and filtration products. It produces and sells a range of commercial silica products, including whole grain and ground products, as well as other industrial mineral products.
Southern Copper Corporation Company Profile
Southern Copper Corporation is an integrated copper producer. It produces copper and, in the production process, obtains several by-products, including molybdenum, silver, zinc, sulfuric acid and other metals. Its segments include the Peruvian operations, the Mexican open-pit operations and the Mexican underground mining operations segment identified as the IMMSA unit. The Peruvian operations segment includes the Toquepala and Cuajone mine complexes, and the smelting and refining plants, including a metals plant industrial railroad and port facilities that service both mines. The Mexican open-pit operations segment includes the La Caridad and Buenavista mine complexes, and the smelting and refining plants, including a metals plant and a copper rod plant, and support facilities that service both mines. As of December 31, 2016, the Mexican underground mining operations segment included five underground mines that produce zinc, copper, silver and gold, a coal mine and a zinc refinery.
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