Analyzing NextSource Materials (OTCMKTS:NSRCF) and Gatos Silver (NYSE:GATO)

NextSource Materials (OTCMKTS:NSRCF) and Gatos Silver (NYSE:GATO) are both small-cap basic materials companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, profitability, risk, dividends, earnings and valuation.

Earnings & Valuation

This table compares NextSource Materials and Gatos Silver”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NextSource Materials	N/A	N/A	-$9.00 million	($0.08)	-3.47
Gatos Silver	N/A	N/A	$12.86 million	$0.49	29.39

NextSource Materials is trading at a lower price-to-earnings ratio than Gatos Silver, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent ratings and target prices for NextSource Materials and Gatos Silver, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NextSource Materials	0	1	0	0	2.00
Gatos Silver	0	4	0	1	2.40

Gatos Silver has a consensus target price of $12.90, suggesting a potential downside of 10.42%. Given Gatos Silver’s stronger consensus rating and higher probable upside, analysts plainly believe Gatos Silver is more favorable than NextSource Materials.

Volatility and Risk

NextSource Materials has a beta of 1.07, suggesting that its share price is 7% more volatile than the S&P 500. Comparatively, Gatos Silver has a beta of 1.95, suggesting that its share price is 95% more volatile than the S&P 500.

Institutional and Insider Ownership

44.8% of Gatos Silver shares are owned by institutional investors. 4.6% of NextSource Materials shares are owned by company insiders. Comparatively, 3.8% of Gatos Silver shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares NextSource Materials and Gatos Silver’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NextSource Materials	N/A	-23.80%	-13.97%
Gatos Silver	N/A	10.37%	9.94%

Summary

Gatos Silver beats NextSource Materials on 10 of the 11 factors compared between the two stocks.

About NextSource Materials

NextSource Materials Inc. acquires, explores for, and develops mineral properties in Madagascar and Canada. The company primarily explores for graphite and vanadium deposits. Its flagship property is the 100% owned Molo graphite mine project located in the Southern Madagascar Region, Madagascar. The company was formerly known as Energizer Resources Inc. The company was founded in 2004 and is headquartered in Toronto, Canada.

About Gatos Silver

Gatos Silver, Inc. engages in the exploration, development, and production of precious metals. It primarily explores for silver deposits. The company also explores for zinc, lead, copper, and gold ores. Its flagship asset is the Los Gatos District, including the Cerro Los Gatos mine in Chihuahua, Mexico. The company was formerly known as Sunshine Silver Mining & Refining Corporation and changed its name to Gatos Silver, Inc. in October 2020. Gatos Silver, Inc. was incorporated in 2009 and is headquartered in Vancouver, Canada.