Alpha Appalachia (NYSE: MEE) and Alliance Resource Partners (NASDAQ:ARLP) are both energy companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, earnings, risk, profitability and valuation.
This is a breakdown of recent recommendations and price targets for Alpha Appalachia and Alliance Resource Partners, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Alliance Resource Partners||0||1||3||0||2.75|
This table compares Alpha Appalachia and Alliance Resource Partners’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Alliance Resource Partners||18.96%||31.11%||16.14%|
Institutional & Insider Ownership
14.4% of Alliance Resource Partners shares are owned by institutional investors. 44.0% of Alliance Resource Partners shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Earnings & Valuation
This table compares Alpha Appalachia and Alliance Resource Partners’ revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Alliance Resource Partners||$1.93 billion||1.43||$339.39 million||$3.84||5.49|
Alliance Resource Partners has higher revenue and earnings than Alpha Appalachia. Alpha Appalachia is trading at a lower price-to-earnings ratio than Alliance Resource Partners, indicating that it is currently the more affordable of the two stocks.
Alliance Resource Partners pays an annual dividend of $2.02 per share and has a dividend yield of 9.6%. Alpha Appalachia does not pay a dividend. Alliance Resource Partners pays out 52.6% of its earnings in the form of a dividend.
Alliance Resource Partners beats Alpha Appalachia on 9 of the 10 factors compared between the two stocks.
About Alpha Appalachia
Massey Energy Company (Massey) is a coal producer in the United States. The Company produces, processes and sells bituminous coal of various steam and metallurgical grades, primarily of a low sulfur content, through its 25 processing and shipping centers (Resource Groups), many of which receive coal from multiple mines. At January 31, 2011, the Company operated 84 mines, including 66 underground mines (one of which employs both room and pillar and longwall mining) and 18 surface mines (with 12 highwall miners in operation) in West Virginia, Kentucky and Virginia. On April 19, 2010, the Company completed the acquisition of Cumberland Resources Corporation and certain affiliated entities (Cumberland). The Cumberland operations include primarily underground coal mines in Southwestern Virginia and Eastern Kentucky. The Company owns a majority interest in Coalsolv, LLC (Coalsolv).
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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