Battle Of The Miners: Glencore PLC vs Antofagasta plc vs Anglo American plc


While Antofagasta (LSE: AAL) has disappointed investors in 2014, with shares in the copper miner being down 4% year to date, Anglo American (LSE: AAL) and Glencore (LSE: GLEN) have had a great year. Indeed, they are up 17% and 15% respectively, with the recent news of Glencore’s completion of the sale of its Frieda River copper, gold and silver mines to Australian operator, PanAust, firming shares up further.

However, results released today from Antofagasta also show that it is making progress. Could it now be the best buy of the three companies? Or are Anglo American and Glencore all set to continue their outperformance?

Mixed Results

Today’s results from Antofagasta showed that the company’s sales fell by 4.2% and its profit before tax was 13% lower than in the same period last year as a result of lower copper and gold prices, as well as a 4.4% fall in copper output. This fall in output was mainly a result of a lower-than-expected grade from the company’s mines, but it remains on target to produce some 700,000 tonnes of copper during 2014. As such, its full-year forecasts remain encouraging, while the company is expected to increase its bottom line by around 7% in 2015.

Sector Peers

Of course, sector peers Anglo American and Glencore also have positive forecasts for next year. They are expected to increase their bottom lines by 18% and 34% respectively, both of which are considerably ahead of Antofagasta’s numbers. Indeed, despite having higher growth potential, Glencore and Anglo American seem to offer better value for money than their sector peer.

For example, while Antofagasta trades on a price to earnings (P/E) ratio of 16.5, Anglo American’s P/E is just 14.3, while Glencore’s is also lower than Antofagasta’s at 16. Furthermore, when the three companies’ growth potential is taken into account, Glencore and Anglo American appear to offer more ‘bang for your buck’ in terms of price paid for growth. For instance, while Antofagasta’s price to earnings growth (PEG) ratio is 2.3, Anglo American’s is 0.7, while Glencore’s is even more attractive at just 0.4. This shows that Anglo American and Glencore seem to offer growth at a more reasonable price than Antofagasta.

Looking Ahead

While all three companies could have bright futures, Anglo American and Glencore seem to offer better performance potential at a lower price. Certainly, Antofagasta is well placed to benefit from an uptick in the price of gold and copper, and it is making encouraging progress towards becoming a more efficient and profitable business. However, at present, Glencore and Anglo American seem to be the better investments, with Glencore in particular offering vast growth at a very reasonable price.

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Peter Stephens has no position in any shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.