By Jennifer Salazar

April 7, 2018 - Alliance Holdings GP (NASDAQ: AHGP) and Peabody Energy (NYSE:BTU) are both oils/energy companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, risk, valuation, institutional ownership, earnings and profitability.

Insider & Institutional Ownership

21.4% of Alliance Holdings GP shares are owned by institutional investors. Comparatively, 79.3% of Peabody Energy shares are owned by institutional investors. 1.3% 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 company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings for Alliance Holdings GP and Peabody Energy, as reported by MarketBeat.

Alliance Holdings GP currently has a consensus price target of $32.00, suggesting a potential upside of 30.19%. Peabody Energy has a consensus price target of $42.00, suggesting a potential upside of 17.35%. Given Alliance Holdings GP’s higher probable upside, research analysts plainly believe Alliance Holdings GP is more favorable than Peabody Energy.

Earnings & Valuation

This table compares Alliance Holdings GP and Peabody Energy’s revenue, earnings per share and valuation.

Peabody Energy has higher revenue and earnings than Alliance Holdings GP.

Profitability

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

Dividends

Alliance Holdings GP pays an annual dividend of $2.97 per share and has a dividend yield of 12.1%. Peabody Energy pays an annual dividend of $0.46 per share and has a dividend yield of 1.3%. Alliance Holdings GP pays out 92.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Peabody Energy beats Alliance Holdings GP on 10 of the 14 factors compared between the two stocks.

About Alliance Holdings GP

Alliance Holdings GP, L.P. (AHGP) is a limited partnership company. The Company owns directly and indirectly the members’ interest in Alliance Resource Management GP, LLC (MGP), the managing general partner of Alliance Resource Partners, L.P. (ARLP). The Company’s segments include Illinois Basin, Appalachia, and Other and Corporate. The Illinois Basin segment consists of mining complexes, including Webster County Coal’s Dotiki mining complex; Gibson County Coal’s mining complex, which includes the Gibson North mine and Gibson South mine; Warrior’s mining complex; River View’s mining complex and the Hamilton mining complex. The Appalachia segment consists of various operating segments, including the Mettiki mining complex, the Tunnel Ridge mining complex and the MC Mining mining complex. The Mettiki mining complex includes Mettiki Coal (WV)’s Mountain View mine and Mettiki Coal’s preparation plant. Other and Corporate segment includes marketing and administrative activities.

About Peabody Energy 

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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