Lithium Americas (NYSE:LAC) and Rio Tinto (NYSE:RIO) are both basic materials companies, but which is the superior stock? We will contrast the two businesses based on the strength of their institutional ownership, risk, valuation, dividends, analyst recommendations, profitability and earnings.
This table compares Lithium Americas and Rio Tinto’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a summary of recent ratings and price targets for Lithium Americas and Rio Tinto, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Rio Tinto has a consensus target price of $59.44, suggesting a potential downside of 2.16%. Given Rio Tinto’s higher possible upside, analysts plainly believe Rio Tinto is more favorable than Lithium Americas.
Rio Tinto pays an annual dividend of $3.60 per share and has a dividend yield of 5.9%. Lithium Americas does not pay a dividend. Rio Tinto pays out 71.0% of its earnings in the form of a dividend. Rio Tinto has increased its dividend for 2 consecutive years.
Institutional and Insider Ownership
5.5% of Lithium Americas shares are held by institutional investors. Comparatively, 8.6% of Rio Tinto shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Risk and Volatility
Lithium Americas has a beta of 1.32, suggesting that its share price is 32% more volatile than the S&P 500. Comparatively, Rio Tinto has a beta of 0.81, suggesting that its share price is 19% less volatile than the S&P 500.
Earnings and Valuation
This table compares Lithium Americas and Rio Tinto’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Lithium Americas||$4.84 million||71.32||-$28.27 million||($0.26)||-14.92|
|Rio Tinto||$40.52 billion||1.91||$13.64 billion||$5.07||11.98|
Rio Tinto has higher revenue and earnings than Lithium Americas. Lithium Americas is trading at a lower price-to-earnings ratio than Rio Tinto, indicating that it is currently the more affordable of the two stocks.
Rio Tinto beats Lithium Americas on 12 of the 16 factors compared between the two stocks.
About Lithium Americas
Lithium Americas Corp. operates as a resource company in the United States. The company explores for lithium deposits. It primarily holds interests in the Cauchari-Olaroz Project located in Jujuy province of Argentina; and owns a 100% interest in the Thacker Pass lithium project located in Nevada. The company also manufactures and sells organoclay products that are used in complex oil and gas drilling and other applications. The company was formerly known as Western Lithium USA Corporation and changed its name to Lithium Americas Corp. in March 2016. Lithium Americas Corp. was incorporated in 2007 and is headquartered in Vancouver, Canada.
About Rio Tinto
Rio Tinto Group engages in finding, mining, and processing mineral resources worldwide. The company offers aluminium, silver, molybdenum, copper, diamonds, gold, borates, titanium dioxide, salt, iron ore, and uranium. It is also involved in the alumina production; primary aluminium smelting; bauxite mining; alumina refining; and ilmenite mining, as well as provision of gypsum. Rio Tinto Group is headquartered in London, the United Kingdom.
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