POSCO (NYSE: PKX) and SunCoke Energy Partners, L.P. (NYSE:SXCP) are both basic materials companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, earnings, risk, analyst recommendations and valuation.

Dividends

POSCO pays an annual dividend of $0.55 per share and has a dividend yield of 0.7%. SunCoke Energy Partners, L.P. pays an annual dividend of $2.38 per share and has a dividend yield of 13.3%. POSCO pays out 9.9% of its earnings in the form of a dividend. SunCoke Energy Partners, L.P. pays out -127.3% 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. SunCoke Energy Partners, L.P. is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

POSCO has a beta of 1.11, meaning that its stock price is 11% more volatile than the S&P 500. Comparatively, SunCoke Energy Partners, L.P. has a beta of 1.31, meaning that its stock price is 31% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and target prices for POSCO and SunCoke Energy Partners, L.P., as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
POSCO 0 2 3 0 2.60
SunCoke Energy Partners, L.P. 0 0 0 0 N/A

Institutional and Insider Ownership

5.2% of POSCO shares are held by institutional investors. Comparatively, 15.7% of SunCoke Energy Partners, L.P. shares are held by institutional investors. 0.0% of POSCO shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
POSCO $50.91 billion 0.47 $6.18 billion $5.58 13.29
SunCoke Energy Partners, L.P. $800.00 million 1.03 $218.50 million ($1.87) -9.55

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

Profitability

This table compares POSCO and SunCoke Energy Partners, L.P.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
POSCO 3.60% 4.41% 2.78%
SunCoke Energy Partners, L.P. -9.52% 14.02% 5.44%

Summary

SunCoke Energy Partners, L.P. beats POSCO on 7 of the 13 factors compared between the two stocks.

POSCO Company Profile

POSCO is a Korea-based company principally engaged in the manufacture and distribution of steel products. The Company operates in four segments: steel, trading, construction, and others. The steel segment includes production of steel products and sale of such products. The trading segment consists of global trading activities of POSCO Daewoo Corporation, exporting and importing a range of steel products that are both obtained from and supplied to it, as well as between other suppliers and purchasers in Korea and overseas. The construction segment includes planning, designing and construction of industrial plants, civil engineering projects, and commercial and residential buildings, both in Korea and overseas. The others segment includes power generation, liquefied natural gas (LNG) logistics, and network and system integration.

SunCoke Energy Partners, L.P. Company Profile

SunCoke Energy Partners, L.P. is engaged in the production of coke used in the blast furnace production of steel. As of December 31, 2016, the Company owned a 98% interest in Haverhill Coke Company LLC (Haverhill), Middletown Coke Company, LLC (Middletown), and Gateway Energy and Coke Company, LLC (Granite City). The Company’s segments include Domestic Coke, which consists of the Haverhill, Middletown and Granite City cokemaking and heat recovery operations located in Franklin Furnace, Ohio; Middletown, Ohio, and Granite City, Illinois, respectively, and Coal Logistics, which consists of the Company’s Convent Marine Terminal, Kanawha River Terminals, LLC and SunCoke Lake Terminal, LLC (Lake Terminal) coal handling and/or mixing service operations in Convent, Louisiana; Ceredo and Belle, West Virginia, and East Chicago, Indiana, respectively. It also provides coal handling and/or mixing services at its Coal Logistics terminals to steel, coke, electric utility and coal mining customers.

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