Financial Analysis: SouthGobi Resources (OTCMKTS:SGQRF) versus Ramaco Resources (NASDAQ:METC)

SouthGobi Resources (OTCMKTS:SGQRF) and Ramaco Resources (NASDAQ:METC) are both small-cap energy companies, but which is the superior stock? We will contrast the two businesses based on the strength of their profitability, institutional ownership, risk, valuation, analyst recommendations, dividends and earnings.

Insider and Institutional Ownership

74.5% of Ramaco Resources shares are owned by institutional investors. 0.1% of SouthGobi Resources shares are owned by insiders. Comparatively, 36.2% of Ramaco Resources shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Volatility and Risk

SouthGobi Resources has a beta of 72.07, indicating that its stock price is 7,107% more volatile than the S&P 500. Comparatively, Ramaco Resources has a beta of 1.35, indicating that its stock price is 35% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for SouthGobi Resources and Ramaco Resources, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SouthGobi Resources	0	0	0	0	0.00
Ramaco Resources	0	0	3	0	3.00

Ramaco Resources has a consensus price target of $21.6667, suggesting a potential downside of 7.76%. Given Ramaco Resources’ stronger consensus rating and higher probable upside, analysts clearly believe Ramaco Resources is more favorable than SouthGobi Resources.

Profitability

This table compares SouthGobi Resources and Ramaco Resources’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SouthGobi Resources	10.12%	-15.18%	3.65%
Ramaco Resources	-3.17%	-5.55%	-2.96%

Valuation and Earnings

This table compares SouthGobi Resources and Ramaco Resources”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SouthGobi Resources	$493.38 million	0.24	$92.50 million	$0.16	2.54
Ramaco Resources	$666.29 million	1.95	$11.19 million	($0.45)	-52.20

SouthGobi Resources has higher earnings, but lower revenue than Ramaco Resources. Ramaco Resources is trading at a lower price-to-earnings ratio than SouthGobi Resources, indicating that it is currently the more affordable of the two stocks.

Summary

Ramaco Resources beats SouthGobi Resources on 8 of the 14 factors compared between the two stocks.

About SouthGobi Resources

SouthGobi Resources Ltd., together with its subsidiaries, operates as an integrated coal mining, development, and exploration company in Mongolia and Hong Kong. The company primarily explores for coking and thermal coal. Its flagship project is the Ovoot Tolgoi open pit coal mine located in the Umnugobi Aimag of Mongolia. The company was formerly known as SouthGobi Energy Resources Ltd. and changed its name to SouthGobi Resources Ltd. in May 2010. SouthGobi Resources Ltd. is based in Kowloon, Hong Kong.

About Ramaco Resources

Ramaco Resources, Inc. engages in the development, operation, and sale of metallurgical coal. Its development portfolio includes the Elk Creek project that covers an area of approximately 20,200 acres located in southern West Virginia; the Berwind property covering an area of approximately 62,500 acres situated on the border of West Virginia and Virginia; the Knox Creek property, which covers an area of approximately 64,050 acres is located in Virginia; the Maben property covering an area of approximately 28,000 acres situated in southwestern Pennsylvania southern West Virginia; and the Brook Mine property that covers an area of approximately 16,000 acres located in northeastern Wyoming. The company serves blast furnace steel mills and coke plants in the United States, as well as metallurgical coal consumers internationally. Ramaco Resources, Inc. was founded in 2015 and is headquartered in Lexington, Kentucky.