Head to Head Contrast: Wheaton Precious Metals (WPM) and Southern Copper (SCCO)

Wheaton Precious Metals (NYSE: WPM) and Southern Copper (NYSE:SCCO) are both basic materials companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, earnings, profitability, analyst recommendations, risk, institutional ownership and dividends.

Dividends

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Wheaton Precious Metals pays an annual dividend of $0.36 per share and has a dividend yield of 1.8%. Southern Copper pays an annual dividend of $1.20 per share and has a dividend yield of 2.2%. Wheaton Precious Metals pays out 57.1% of its earnings in the form of a dividend. Southern Copper pays out 120.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Volatility & Risk

Wheaton Precious Metals has a beta of 0.41, meaning that its stock price is 59% less volatile than the S&P 500. Comparatively, Southern Copper has a beta of 0.48, meaning that its stock price is 52% less volatile than the S&P 500.

Insider & Institutional Ownership

52.3% of Wheaton Precious Metals shares are owned by institutional investors. Comparatively, 6.9% of Southern Copper shares are owned by institutional investors. 0.5% of Southern Copper shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Wheaton Precious Metals and Southern Copper’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Wheaton Precious Metals 6.84% 5.56% 4.69%
Southern Copper 10.95% 11.57% 5.33%

Valuation and Earnings

This table compares Wheaton Precious Metals and Southern Copper’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Wheaton Precious Metals $843.22 million 10.70 $57.70 million $0.63 32.33
Southern Copper $6.65 billion 6.29 $728.50 million $1.00 54.18

Southern Copper has higher revenue and earnings than Wheaton Precious Metals. Wheaton Precious Metals is trading at a lower price-to-earnings ratio than Southern Copper, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current ratings for Wheaton Precious Metals and Southern Copper, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Wheaton Precious Metals 0 1 7 0 2.88
Southern Copper 2 3 3 0 2.13

Wheaton Precious Metals currently has a consensus price target of $26.29, suggesting a potential upside of 29.04%. Southern Copper has a consensus price target of $45.40, suggesting a potential downside of 16.21%. Given Wheaton Precious Metals’ stronger consensus rating and higher probable upside, equities analysts plainly believe Wheaton Precious Metals is more favorable than Southern Copper.

Summary

Southern Copper beats Wheaton Precious Metals on 10 of the 16 factors compared between the two stocks.

Wheaton Precious Metals Company Profile

Wheaton Precious Metals Corp, formerly Silver Wheaton Corp, is a Canada-based pure precious metals streaming company engaged in the sale of silver and gold. The Company operates through eight segments: the silver produced by the San Dimas, Penasquito and Antamina mines, the gold produced by the Sudbury and Salobo mines, the silver and gold produced by the Constancia mine and the Other mines, and corporate operations. The Company has entered into long-term purchase agreements and early deposit long-term purchase agreement associated with silver and gold (precious metal purchase agreements), relating to mining assets, whereby Silver Wheaton acquires silver and gold production at various mines. The San Dimas gold-silver deposit is located in the San Dimas district on the border of Durango and Sinaloa states. The Company holds interest in Los Filos mine, Zinkgruvan mining operations, Stratoni mine, Keno Hill silver, Cozamin mine, Aljustrel mine, 777 mine and Constancia mines.

Southern Copper 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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