Financial Review: Warrior Met Coal (NYSE:HCC) vs. 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 contrast the two businesses based on the strength of their valuation, analyst recommendations, dividends, earnings, institutional ownership, risk and profitability.

Volatility and Risk

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

Analyst Ratings

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

	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 16.50%. Given Warrior Met Coal’s stronger consensus rating and higher possible upside, analysts clearly believe Warrior Met Coal is more favorable than Outokumpu.

Earnings & Valuation

This table compares Outokumpu and Warrior Met Coal”s gross 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)	-26.60
Warrior Met Coal	$1.68 billion	2.82	$57.00 million	$4.16	21.56

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 0.8%. 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 increased its dividend for 1 consecutive years. Outokumpu is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider and Institutional Ownership

92.3% of Warrior Met Coal shares are held by institutional investors. 2.1% of Warrior Met Coal shares are held by company 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.

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 14 of the 17 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.