For investors in natural resources, Freeport-McMoRan (NYSE:FCX) and Alcoa (NYSE:AA) have taken different angles at the broader industry. Freeport-McMoRan has gone through several transformative moves over its history, starting as an integrated natural resources company, later spinning off energy assets to become a mining specialist, and then later reintegrating its oil and gas exposure through acquisition to become a larger natural-resources play. Meanwhile, Alcoa is now focused solely on its base-metals business after spinning off its engineered products division as a separate publicly traded company.

Now that markets are rebounding, investors are looking to find out whether Freeport or Alcoa is the better pick. Let's look at the two companies to see how they stack up based on a number of popular metrics.

Stock performance and valuation

Freeport-McMoRan and Alcoa have moved in different directions recently. Alcoa is up 36% since June 2016, but Freeport-McMoRan has eased downward, falling 2% over the past 12 months.

From a valuation standpoint, it's tough to evaluate Freeport or Alcoa based on recent earnings. That's because both companies have had depressed bottom lines as they recover from long downturns in their respective industries. Currently, Freeport has a trailing earnings multiple of 60, while Alcoa's has soared into the triple digits. That makes the numbers less than completely meaningful.

Assessing the two companies on a forward basis is simpler. Based on future earnings projections, Freeport trades at a forward earnings multiple of less than nine. Alcoa's price of about 13 times forward earnings is also attractive, but it isn't enough to match the copper and gold miner and energy company. Despite its poor stock performance, Freeport looks like the better bet from a valuation perspective.

Alcoa recycling exhibit.

Image source: Alcoa.

Dividends

Neither Freeport-McMoRan nor Alcoa pays a dividend currently. Each of the companies has a history of making dividend payments to shareholders, but recent tough times forced them to take a closer look at their dividend policies and make adjustments in order to adapt to adverse conditions.

Freeport hasn't paid a dividend in a couple of years, corresponding to when crude oil started to plunge. Freeport continues to face challenges in its core businesses, and even though conditions have gotten better across the commodities markets, the recent price drop in crude is just the latest reminder that gains can quickly reverse themselves. Nevertheless, some hope that a recovery for the natural resources stock last year might signal an ability to pay a dividend again in the near future.

Alcoa, meanwhile, is in a position in which it needs to figure out how to adapt to its new corporate structure. Alcoa's previous dividend was relatively small, and financing needs connected to the spinoff required the continuing entity to retain more capital. Earlier this year, Alcoa's chief financial officer said that restoring a dividend will require reducing leverage levels, and that will take time to achieve. Even once things get better, though, Alcoa could choose stock buybacks or a special dividend rather than instituting a regular quarterly dividend.

For now, investors can't expect any dividend income from either stock in the near future. It'll take much better conditions for Freeport or Alcoa to start paying out money again.

Growth prospects and risk

The main challenge that Freeport-McMoRan and Alcoa face is that, while conditions in their industries have improved, they haven't gotten back to normal. Freeport has had to deal with the ongoing tug of war in the energy markets, as oil has recently fallen back below the $45 per-barrel level. Weak fundamentals in the market for crude suggests that further downside is possible, and that would only exacerbate the problems that have led to massive impairment charges for Freeport assets.

Meanwhile, Freeport hopes that its copper and gold business can gain ground, but the Indonesian government is still a potential impediment as it seeks to put more restrictions and collect more taxes on the miner's most important mining asset. It will take sustained gains in the commodities markets for Freeport to get back to its best possible growth trajectory.

Alcoa has benefited so far from its move to split off its value-add engineered products unit, as the base metals part of the business has done well. Alcoa has worked hard to cut back on expenses, and early signs suggest that the efforts are paying off with better income figures. Low-cost foreign rivals are still a problem that Alcoa has to surmount, and the company has substantial obligations that it will have to fund over the long run. However, as demand for lower-weight metals increases, Alcoa is likely to become even more important to the overall economic recovery.

Overall, Alcoa looks like the better buy right now, even with its recent share-price gains. Freeport is too dependent on the volatile energy market, while Alcoa can count on being able to do better once levels of activity in the industrial economy perk up. Freeport will reach its full potential only if energy bounces back sharply.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of Freeport-McMoRan Copper & Gold. The Motley Fool has a disclosure policy.