HudBay Minerals (NYSE:HBM) versus Wheaton Precious Metals (NYSE:WPM) Critical Review

Wheaton Precious Metals (NYSE:WPM) and HudBay Minerals (NYSE:HBM) are both large-cap materials companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, valuation, risk, earnings, dividends, analyst recommendations and institutional ownership.

Earnings and Valuation

This table compares Wheaton Precious Metals and HudBay Minerals”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	$2.31 billion	26.32	$1.47 billion	$4.51	29.74
HudBay Minerals	$2.21 billion	4.74	$568.50 million	$1.70	13.87

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

Profitability

This table compares Wheaton Precious Metals and HudBay Minerals’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Wheaton Precious Metals	64.66%	21.97%	19.83%
HudBay Minerals	27.48%	9.47%	5.44%

Risk and Volatility

Wheaton Precious Metals has a beta of 0.54, suggesting that its share price is 46% less volatile than the S&P 500. Comparatively, HudBay Minerals has a beta of 1.58, suggesting that its share price is 58% more volatile than the S&P 500.

Dividends

Wheaton Precious Metals pays an annual dividend of $0.78 per share and has a dividend yield of 0.6%. HudBay Minerals pays an annual dividend of $0.03 per share and has a dividend yield of 0.1%. Wheaton Precious Metals pays out 17.3% of its earnings in the form of a dividend. HudBay Minerals pays out 1.8% 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. Wheaton Precious Metals has raised its dividend for 2 consecutive years. Wheaton Precious Metals is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current ratings and target prices for Wheaton Precious Metals and HudBay Minerals, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Wheaton Precious Metals	0	1	10	0	2.91
HudBay Minerals	0	2	10	0	2.83

Wheaton Precious Metals currently has a consensus target price of $172.11, indicating a potential upside of 28.32%. HudBay Minerals has a consensus target price of $31.33, indicating a potential upside of 32.90%. Given HudBay Minerals’ higher probable upside, analysts clearly believe HudBay Minerals is more favorable than Wheaton Precious Metals.

Institutional and Insider Ownership

70.3% of Wheaton Precious Metals shares are held by institutional investors. Comparatively, 57.8% of HudBay Minerals shares are held by institutional investors. 0.3% of HudBay Minerals shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Wheaton Precious Metals beats HudBay Minerals on 12 of the 16 factors compared between the two stocks.

About Wheaton Precious Metals

Wheaton Precious Metals Corp. primarily sells precious metals in North America, Europe, and South America. It produces and sells gold, silver, palladium, and cobalt deposits. The company was formerly known as Silver Wheaton Corp. and changed its name to Wheaton Precious Metals Corp. in May 2017. Wheaton Precious Metals Corp. was founded in 2004 and is headquartered in Vancouver, Canada.

About HudBay Minerals

Hudbay Minerals Inc., a diversified mining company, focuses on the exploration, development, operation, and optimization of properties in North and South America. It produces copper concentrates containing gold, silver, and molybdenum; gold concentrates containing zinc; zinc concentrates; molybdenum concentrates; and silver/gold doré. The company's flagship project is the 100% owned Constancia mine located in the Province of Chumbivilcas in southern Peru. Hudbay Minerals Inc. was founded in 1927 and is based in Toronto, Canada.