Analyzing Warrior Met Coal (NYSE:HCC) and Outokumpu (OTCMKTS:OUTKY)

Outokumpu (OTCMKTS:OUTKY) and Warrior Met Coal (NYSE:HCC) are both mid-cap materials companies, but which is the better business? We will compare the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, analyst recommendations, valuation and dividends.

Risk and Volatility

Outokumpu has a beta of 0.65, meaning that its share price is 35% less volatile than the S&P 500. Comparatively, Warrior Met Coal has a beta of 0.72, meaning that its share price is 28% less volatile than the S&P 500.

Insider & Institutional Ownership

92.3% of Warrior Met Coal shares are owned by institutional investors. 2.1% of Warrior Met Coal shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Outokumpu and Warrior Met Coal, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Outokumpu	0	4	1	0	2.20
Warrior Met Coal	0	4	4	0	2.50

Warrior Met Coal has a consensus price target of $104.50, suggesting a potential upside of 23.17%. Given Warrior Met Coal’s stronger consensus rating and higher possible upside, analysts clearly believe Warrior Met Coal is more favorable than Outokumpu.

Earnings and Valuation

This table compares Outokumpu and Warrior Met Coal”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Outokumpu	$6.19 billion	0.41	-$155.00 million	($0.10)	-26.95
Warrior Met Coal	$1.31 billion	3.42	$57.00 million	$4.16	20.39

Warrior Met Coal has lower revenue, but higher earnings than Outokumpu. Outokumpu is trading at a lower price-to-earnings ratio than Warrior Met Coal, indicating that it is currently the more affordable of the two stocks.

Dividends

Outokumpu pays an annual dividend of $0.02 per share and has a dividend yield of 0.7%. Warrior Met Coal pays an annual dividend of $0.32 per share and has a dividend yield of 0.4%. Outokumpu pays out -20.0% of its earnings in the form of a dividend. Warrior Met Coal pays out 7.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Warrior Met Coal has raised its dividend for 1 consecutive years. Outokumpu is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Outokumpu and Warrior Met Coal’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Outokumpu	-1.48%	-2.38%	-1.41%
Warrior Met Coal	13.05%	10.02%	7.84%

Summary

Warrior Met Coal beats Outokumpu on 13 of the 16 factors compared between the two stocks.

About Outokumpu

Outokumpu Oyj produces and sells various stainless steel products in Finland, other European countries, North America, the Asia-Pacific, and internationally. The company operates through three segments: Europe, Americas, and Ferrochrome. It offers cold rolled coils, strips, and sheets; hot rolled coils, strips, and plates; quarto plates; precision strips; and specialized components, such as welded stainless-steel I-beams, H-beams, hollow-section tubes, bent profiles, structural sections, hardened and customized press plates, suction roll shells, and blancs and disks. The company also provides stainless steel powder which includes Supra 316L, Dura 17-4PH, Ultra 904L, Therma 253MA, Dura 4116, and Ni-free austenitic stainless steel powder; and nickel-based alloys. Its products are used in various applications, including commercial kitchen, cooking, food industry, and home appliances; automotive and transportation; building and infrastructure; energy; marine; and heavy industries. The company was founded in 1910 and is headquartered in Helsinki, Finland.

About Warrior Met Coal

Warrior Met Coal, Inc. produces and exports non-thermal metallurgical coal for the steel industry. It operates two underground mines located in Alabama. The company sells its metallurgical coal to a customer base of blast furnace steel producers located primarily in Europe, South America, and Asia. It also sells natural gas, which is extracted as a byproduct from coal production. Warrior Met Coal, Inc. was incorporated in 2015 and is headquartered in Brookwood, Alabama.