By Wayne Landers

July 16, 2017 - Alliance Resource Partners, L.P. (NASDAQ: ARLP) and Peabody Energy (OTCMKTS:BTUUQ) are both oils/energy companies, but which is the better stock? We will contrast the two businesses based on the strength of their dividends, institutional ownership, earnings, analyst recommendations, risk, profitabiliy and valuation.

Risk and Volatility

Alliance Resource Partners, L.P. has a beta of 0.68, meaning that its stock price is 32% less volatile than the S&P 500. Comparatively, Peabody Energy has a beta of -2.55, meaning that its stock price is 355% less volatile than the S&P 500.

Profitability

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

Analyst Ratings

This is a breakdown of current ratings and target prices for Alliance Resource Partners, L.P. and Peabody Energy, as reported by MarketBeat.

Alliance Resource Partners, L.P. presently has a consensus price target of $27.75, suggesting a potential upside of 32.78%. Peabody Energy has a consensus price target of $33.00, suggesting a potential upside of 8,516.19%. Given Peabody Energy’s stronger consensus rating and higher possible upside, analysts clearly believe Peabody Energy is more favorable than Alliance Resource Partners, L.P..

Valuation and Earnings

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

Peabody Energy is trading at a lower price-to-earnings ratio than Alliance Resource Partners, L.P., indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

26.4% of Alliance Resource Partners, L.P. shares are owned by institutional investors. Comparatively, 0.0% of Peabody Energy shares are owned by institutional investors. 44.0% of Alliance Resource Partners, L.P. shares are owned by insiders. Comparatively, 1.3% of Peabody Energy shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Alliance Resource Partners, L.P. pays an annual dividend of $1.75 per share and has a dividend yield of 8.4%. Peabody Energy does not pay a dividend. Alliance Resource Partners, L.P. pays out 42.2% of its earnings in the form of a dividend.

Summary

Alliance Resource Partners, L.P. beats Peabody Energy on 9 of the 12 factors compared between the two stocks.

Alliance Resource Partners, L.P. Company Profile

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.