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Analyzing Alliance Resource Partners, L.P. and NACCO Industries

 

 

By Amber Connor

 

November 10, 2017 - Alliance Resource Partners, L.P. (NASDAQ: ARLP) and NACCO Industries (NYSE:NC) are both oils/energy companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, profitability, earnings, dividends, valuation, analyst recommendations and institutional ownership.


Analyst Ratings

 

This is a breakdown of recent recommendations and price targets for Alliance Resource Partners, L.P. and NACCO Industries, as reported by MarketBeat.

 


Alliance Resource Partners, L.P. presently has a consensus target price of $27.67, indicating a potential upside of 47.95%. Given Alliance Resource Partners, L.P.’s higher possible upside, equities research analysts clearly believe Alliance Resource Partners, L.P. is more favorable than NACCO Industries.

 

Profitability

 

This table compares Alliance Resource Partners, L.P. and NACCO Industries’ net margins, return on equity and return on assets.

 

 

Dividends

 

Alliance Resource Partners, L.P. pays an annual dividend of $2.02 per share and has a dividend yield of 10.8%. NACCO Industries pays an annual dividend of $2.08 per share and has a dividend yield of 4.9%. Alliance Resource Partners, L.P. pays out 54.0% of its earnings in the form of a dividend. NACCO Industries pays out 32.1% 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. Alliance Resource Partners, L.P. has increased its dividend for 3 consecutive years. Alliance Resource Partners, L.P. is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.


Valuation & Earnings

 

This table compares Alliance Resource Partners, L.P. and NACCO Industries’ revenue, earnings per share (EPS) and valuation.

 

 

Alliance Resource Partners, L.P. has higher revenue and earnings than NACCO Industries. Alliance Resource Partners, L.P. is trading at a lower price-to-earnings ratio than NACCO Industries, indicating that it is currently the more affordable of the two stocks.

 

Institutional and Insider Ownership

 

15.0% of Alliance Resource Partners, L.P. shares are held by institutional investors. Comparatively, 49.3% of NACCO Industries shares are held by institutional investors. 44.0% of Alliance Resource Partners, L.P. shares are held by insiders. Comparatively, 30.6% of NACCO Industries shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.


Volatility & Risk

 

Alliance Resource Partners, L.P. has a beta of 0.78, meaning that its stock price is 22% less volatile than the S&P 500. Comparatively, NACCO Industries has a beta of 0.34, meaning that its stock price is 66% less volatile than the S&P 500.


Summary

 

Alliance Resource Partners, L.P. beats NACCO Industries on 12 of the 16 factors compared between the two stocks.

 

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.

 

NACCO Industries, Inc. is a holding company. The Company’s principal business includes mining. The Company operates through the NACoal segment. The Company’s subsidiary includes The North American Coal Corporation (NACoal). The Company’s NACoal segment mines coal for use in power generation and provides mining services for other natural resources companies. Coal is surface mined from NACoal’s mines in North Dakota, Texas, Mississippi, Louisiana and the Navajo Nation in New Mexico. NACoal’s operating coal mining subsidiaries include Bisti Fuels Company, LLC (Bisti), Caddo Creek Resources Company, LLC (Caddo Creek), Camino Real Fuels, LLC (Camino Real), The Coteau Properties Company (Coteau), Coyote Creek Mining Company, LLC (Coyote Creek), Demery Resources Company, LLC (Demery), The Falkirk Mining Company (Falkirk), Liberty Fuels Company, LLC (Liberty), Mississippi Lignite Mining Company (MLMC) and The Sabine Mining Company (Sabine).