Critical Contrast: Alliance Holdings GP (AHGP) versus Peabody Energy (BTU)

Alliance Holdings GP (NASDAQ: AHGP) and Peabody Energy (NYSE:BTU) are both oils/energy companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, institutional ownership, dividends, profitability, analyst recommendations and earnings.

Profitability

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This table compares Alliance Holdings GP and Peabody Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Alliance Holdings GP 10.36% 16.54% 8.67%
Peabody Energy 14.41% 32.83% 7.50%

Earnings & Valuation

This table compares Alliance Holdings GP and Peabody Energy’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Alliance Holdings GP $1.80 billion 0.81 $185.98 million $3.20 7.59
Peabody Energy $5.58 billion 0.84 $461.60 million N/A N/A

Peabody Energy has higher revenue and earnings than Alliance Holdings GP.

Insider and Institutional Ownership

21.4% of Alliance Holdings GP shares are owned by institutional investors. Comparatively, 79.3% of Peabody Energy shares are owned by institutional investors. 0.4% of Peabody Energy shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Alliance Holdings GP pays an annual dividend of $2.97 per share and has a dividend yield of 12.2%. Peabody Energy pays an annual dividend of $0.46 per share and has a dividend yield of 1.3%. Alliance Holdings GP pays out 92.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a summary of current recommendations and price targets for Alliance Holdings GP and Peabody Energy, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alliance Holdings GP 0 1 0 0 2.00
Peabody Energy 0 2 7 0 2.78

Alliance Holdings GP currently has a consensus price target of $32.00, suggesting a potential upside of 31.74%. Peabody Energy has a consensus price target of $42.00, suggesting a potential upside of 15.73%. Given Alliance Holdings GP’s higher probable upside, research analysts clearly believe Alliance Holdings GP is more favorable than Peabody Energy.

Summary

Peabody Energy beats Alliance Holdings GP on 10 of the 14 factors compared between the two stocks.

About Alliance Holdings GP

Alliance Holdings GP, L.P. (AHGP) is a limited partnership company. The Company owns directly and indirectly the members’ interest in Alliance Resource Management GP, LLC (MGP), the managing general partner of Alliance Resource Partners, L.P. (ARLP). The Company’s segments include Illinois Basin, Appalachia, and Other and Corporate. The Illinois Basin segment consists of mining complexes, including Webster County Coal’s Dotiki mining complex; Gibson County Coal’s mining complex, which includes the Gibson North mine and Gibson South mine; Warrior’s mining complex; River View’s mining complex and the Hamilton mining complex. The Appalachia segment consists of various operating segments, including the Mettiki mining complex, the Tunnel Ridge mining complex and the MC Mining mining complex. The Mettiki mining complex includes Mettiki Coal (WV)’s Mountain View mine and Mettiki Coal’s preparation plant. Other and Corporate segment includes marketing and administrative activities.

About Peabody Energy

Peabody Energy Corporation engages in coal mining business. The company operates through six segments: Powder River Basin Mining, Midwestern U.S. Mining, Western U.S. Mining, Australian Metallurgical Mining, Australian Thermal Mining, and Trading and Brokerage. It is involved in mining, preparation, and sale of thermal coal primarily to electric utilities; and metallurgical coal that include hard coking coal, semi-hard coking coal, semi-soft coking coal, and low-volatile pulverized coal injection for industrial customers. The company supplies coal primarily to electricity generators, industrial facilities, and steel manufacturers. It owns interests in 23 coal mining operations located in the United States and Australia. The company also engages in direct and brokered trading of coal and freight-related contracts, as well as provides transportation-related services, which involves financial derivative contracts and physical contracts. As of December 31, 2017, it had 5.2 billion tons of proven and probable coal reserves and approximately 600,000 acres of surface property through ownership and lease agreements. Peabody Energy Corporation was founded in 1883 and is headquartered in St. Louis, Missouri. On April 13, 2016, Peabody Energy Corporation and its subsidiaries filed a voluntary petition for reorganization under Chapter 11 in the United States Bankruptcy Court for the Eastern District of Missouri.

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