Financial Comparison: Alliance Resource Partners (ARLP) vs. Peabody Energy (BTU)

Alliance Resource Partners (NASDAQ: ARLP) and Peabody Energy (NYSE:BTU) are both mid-cap oils/energy companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, risk, earnings, profitability, dividends, valuation and institutional ownership.

Profitability

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

Net Margins Return on Equity Return on Assets
Alliance Resource Partners 19.79% 23.79% 12.66%
Peabody Energy 15.59% 26.49% 9.64%

Institutional and Insider Ownership

14.3% of Alliance Resource Partners shares are owned by institutional investors. Comparatively, 79.6% of Peabody Energy shares are owned by institutional investors. 44.0% of Alliance Resource Partners shares are owned by company insiders. Comparatively, 0.4% of Peabody Energy shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Dividends

Alliance Resource Partners pays an annual dividend of $2.06 per share and has a dividend yield of 11.4%. Peabody Energy pays an annual dividend of $0.46 per share and has a dividend yield of 1.2%. Alliance Resource Partners pays out 71.8% of its earnings in the form of a dividend.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Alliance Resource Partners and Peabody Energy, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alliance Resource Partners 0 1 3 0 2.75
Peabody Energy 0 2 7 0 2.78

Alliance Resource Partners presently has a consensus price target of $25.50, suggesting a potential upside of 41.27%. Peabody Energy has a consensus price target of $42.00, suggesting a potential upside of 8.39%. Given Alliance Resource Partners’ higher possible upside, equities research analysts clearly believe Alliance Resource Partners is more favorable than Peabody Energy.

Valuation and Earnings

This table compares Alliance Resource Partners and Peabody Energy’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Alliance Resource Partners $1.80 billion 1.31 $303.63 million $2.87 6.29
Peabody Energy $5.58 billion 0.90 $461.60 million N/A N/A

Peabody Energy has higher revenue and earnings than Alliance Resource Partners.

Summary

Peabody Energy beats Alliance Resource Partners on 8 of the 14 factors compared between the two stocks.

Alliance Resource Partners Company Profile

Alliance Resource Partners, L.P. produces and markets coal primarily to utilities and industrial users in the United States. The company operates through two segments, Illinois Basin and Appalachia. It produces a range of steam and metallurgical coal with sulfur and heat contents. The company operates eight underground mining complexes in Illinois, Indiana, Kentucky, Maryland, and West Virginia. It also leases land and operates a coal loading terminal on the Ohio River at Mt. Vernon, Indiana; and buys and resells coal, as well as owns equity interests in various oil and gas mineral interests and gas compression services located within producing basins in the continental United States. In addition, the company offers various industrial and mining technology products and services, such as miner and equipment tracking systems, and proximity detection systems. As of December 31, 2017, it had approximately 1.67 billion tons of proven and probable coal reserves in Illinois, Indiana, Kentucky, Maryland, Pennsylvania, and West Virginia. Alliance Resource Management GP, LLC serves as the general partner of the company. The company was founded in 1971 and is headquartered in Tulsa, Oklahoma. Alliance Resource Partners, L.P. is a subsidiary of Alliance Holdings GP, L.P.

Peabody Energy Company Profile

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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