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

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

Volatility & Risk

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

Institutional & Insider Ownership

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

Valuation and Earnings

This table compares Gatos Silver and NextSource Materials”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Gatos Silver	N/A	N/A	$12.86 million	$0.49	29.39
NextSource Materials	N/A	N/A	-$9.00 million	($0.08)	-3.74

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.

Profitability

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

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

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Gatos Silver and NextSource Materials, as reported by MarketBeat.com.

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

Gatos Silver currently has a consensus target price of $12.90, indicating 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.

Summary

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

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.

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.