Alliance Holdings GP, L.P. (NASDAQ: AHGP) and NACCO Industries (NYSE:NC) are both small-cap oils/energy companies, but which is the superior business? We will contrast the two businesses based on the strength of their dividends, earnings, analyst recommendations, institutional ownership, risk, profitability and valuation.

Profitability

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

Net Margins Return on Equity Return on Assets
Alliance Holdings GP, L.P. 10.76% 17.87% 9.25%
NACCO Industries 4.15% 25.69% 8.70%

Analyst Recommendations

This is a summary of recent ratings and price targets for Alliance Holdings GP, L.P. and NACCO Industries, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alliance Holdings GP, L.P. 0 0 0 0 N/A
NACCO Industries 0 0 0 0 N/A

Dividends

Alliance Holdings GP, L.P. pays an annual dividend of $2.92 per share and has a dividend yield of 10.5%. NACCO Industries pays an annual dividend of $2.08 per share and has a dividend yield of 5.0%. Alliance Holdings GP, L.P. pays out 88.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. NACCO Industries pays out 40.2% of its earnings in the form of a dividend. Alliance Holdings GP, L.P. has increased its dividend for 3 consecutive years. Alliance Holdings GP, L.P. is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Alliance Holdings GP, L.P. has a beta of 0.53, indicating that its share price is 47% less volatile than the S&P 500. Comparatively, NACCO Industries has a beta of 0.67, indicating that its share price is 33% less volatile than the S&P 500.

Earnings & Valuation

This table compares Alliance Holdings GP, L.P. and NACCO Industries’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Alliance Holdings GP, L.P. $1.94 billion 0.86 $710.69 million $3.30 8.40
NACCO Industries $854.67 million 0.33 $27.70 million $5.18 8.03

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

Institutional & Insider Ownership

21.5% of Alliance Holdings GP, L.P. shares are held by institutional investors. Comparatively, 49.3% of NACCO Industries shares are held by institutional investors. 30.6% of NACCO Industries shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

Alliance Holdings GP, L.P. beats NACCO Industries on 8 of the 14 factors compared between the two stocks.

About Alliance Holdings GP, L.P.

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 NACCO Industries

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).

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