Warrior Met Coal (NYSE: HCC) and Alliance Resource Partners (NASDAQ:ARLP) are both oils/energy companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, profitability, valuation, institutional ownership, dividends, risk and earnings.
Earnings & Valuation
This table compares Warrior Met Coal and Alliance Resource Partners’ gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Warrior Met Coal||$1.17 billion||1.30||$455.04 million||$8.62||3.32|
|Alliance Resource Partners||$1.80 billion||1.28||$303.63 million||$2.99||5.90|
Warrior Met Coal pays an annual dividend of $0.20 per share and has a dividend yield of 0.7%. Alliance Resource Partners pays an annual dividend of $2.04 per share and has a dividend yield of 11.6%. Warrior Met Coal pays out 2.3% of its earnings in the form of a dividend. Alliance Resource Partners pays out 68.2% 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. Alliance Resource Partners has raised its dividend for 11 consecutive years. Alliance Resource Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This is a breakdown of current recommendations for Warrior Met Coal and Alliance Resource Partners, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Warrior Met Coal||0||6||5||0||2.45|
|Alliance Resource Partners||0||1||2||0||2.67|
Warrior Met Coal presently has a consensus price target of $28.73, suggesting a potential upside of 0.45%. Alliance Resource Partners has a consensus price target of $27.33, suggesting a potential upside of 54.86%. Given Alliance Resource Partners’ stronger consensus rating and higher probable upside, analysts plainly believe Alliance Resource Partners is more favorable than Warrior Met Coal.
This table compares Warrior Met Coal and Alliance Resource Partners’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Warrior Met Coal||38.92%||61.78%||43.24%|
|Alliance Resource Partners||16.90%||26.79%||14.03%|
Institutional and Insider Ownership
14.3% of Alliance Resource Partners shares are held by institutional investors. 0.5% of Warrior Met Coal shares are held by company insiders. Comparatively, 44.0% of Alliance Resource Partners shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
About Warrior Met Coal
Warrior Met Coal, Inc., formerly Warrior Met Coal, LLC, is a producer and exporter of metallurgical coal for the steel industry from underground mines located in Brookwood, Alabama, southwest of Birmingham and near Tuscaloosa. These underground coalmines are 1,400 to 2,100 feet underground. Its operations serve markets in the United States, Europe, Asia and South America via barge and rail access to the Port of Mobile. Currently it has the operational capacity to mine eight million tons of coal per year from more than 300 million tons of recoverable reserves. Its operations also extract methane gas from the Blue Creek coal seam. Its gas division represents commercial programs for coal seam degasification in the country, producing approximately 30 million cubic feet of gas daily from over 1750 gas wells. Its mines operate under permits issued by the Alabama Surface Mining Commission (ASMC), the Alabama Department of Environmental Management (ADEM) and other state and federal agencies.
About Alliance Resource Partners
Alliance Resource Partners, L.P. is a producer and marketer of coal primarily to the United States utilities and industrial users. The Company operates through segments, including Illinois Basin, Appalachia, and Other and Corporate. The Illinois Basin segment consists of various operating segments, including Webster County Coal, LLC’s Dotiki mining complex, Gibson County Coal, LLC’s mining complex, which includes the Gibson North mine and Gibson South mine, Hopkins County Coal, LLC’s mining complex, which includes the Elk Creek mine, the Pleasant View surface mineable reserves and the Fies property, White County Coal, LLC’s, Pattiki mining complex, Warrior Coal, LLC’s mining complex, Sebree Mining, LLC’s mining complex, which includes the Onton mine and River View Coal, LLC mining complex. The Appalachia segment consists of multiple operating segments, including the Mettiki mining complex, the Tunnel Ridge mining complex and the MC Mining mining complex.
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