Critical Review: Arch Coal (ARCH) versus Peabody Energy (BTU)
Arch Coal (NYSE: ARCH) and Peabody Energy (NYSE:BTU) are both basic materials companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, dividends, profitability, institutional ownership, risk and valuation.
Arch Coal pays an annual dividend of $1.40 per share and has a dividend yield of 1.7%. Peabody Energy does not pay a dividend.
This is a breakdown of current ratings and recommmendations for Arch Coal and Peabody Energy, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Arch Coal presently has a consensus target price of $93.00, indicating a potential upside of 10.37%. Peabody Energy has a consensus target price of $35.63, indicating a potential upside of 5.09%. Given Arch Coal’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Arch Coal is more favorable than Peabody Energy.
Earnings and Valuation
This table compares Arch Coal and Peabody Energy’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Arch Coal||$1.97 billion||0.94||$1.28 billion||N/A||N/A|
|Peabody Energy||$4.72 billion||0.75||-$729.30 million||N/A||N/A|
Arch Coal has higher earnings, but lower revenue than Peabody Energy.
Insider and Institutional Ownership
95.1% of Peabody Energy shares are owned by institutional investors. 1.3% of Arch Coal 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.
This table compares Arch Coal and Peabody Energy’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Arch Coal beats Peabody Energy on 7 of the 12 factors compared between the two stocks.
About Arch Coal
Arch Coal, Inc. is a coal producer. The Company is engaged in the production of thermal and metallurgical coal from surface and underground mines located throughout the United States, for sale to utility, industrial and steel producers both in the United States and around the world. The Company operates mining complexes in West Virginia, Kentucky, Maryland, Virginia, Illinois, Wyoming and Colorado. The Company’s segments include the Powder River Basin and Appalachia. The Powder River Basin segment includes operations in Wyoming. The Appalachia segment includes operations in West Virginia, Kentucky, Maryland and Virginia. The Company also sells coal from operations in Colorado and Illinois. Powder River Basin consists of Black Thunder and Coal Creek mines. The Company’s mines in Appalachia include Coal-Mac, Lone Mountain, Mountain Laurel, Beckley, Vindex, Sentinel and Leer. The Company operates, or contracts out the operation of approximately 10 active mines in the United States.
About Peabody Energy
Peabody Energy Corporation is a coal company. The Company’s segments include Powder River Basin Mining, Midwestern U.S. Mining, Western U.S. Mining, Australian Metallurgical Mining, Australian Thermal Mining, Trading and Brokerage, and Corporate and Other. Its Powder River Basin Mining operations consist of its mines in Wyoming. Midwestern U.S. Mining operations reflect the Company’s Illinois and Indiana mining operations. Western U.S. Mining operations reflect the aggregation of the New Mexico, Arizona and Colorado mining operations. Australian Metallurgical Mining operations consist of mines in Queensland and New South Wales, Australia. Australian Thermal Mining operations consist of mines in New South Wales, Australia. Its Trading and Brokerage segment engages in the direct and brokered trading of coal and freight-related contracts through the trading and business offices. Its Corporate and Other includes selling and administrative expenses, and corporate hedging activities.
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