Analyzing Alliance Holdings GP (AHGP) and Arch Coal (ARCH)

Alliance Holdings GP (NASDAQ: AHGP) and Arch Coal (NYSE:ARCH) are both oils/energy companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, profitability, valuation, risk, earnings, institutional ownership and dividends.

Analyst Ratings

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This is a breakdown of recent ratings and price targets for Alliance Holdings GP and Arch Coal, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alliance Holdings GP 0 1 0 0 2.00
Arch Coal 0 2 7 0 2.78

Alliance Holdings GP presently has a consensus price target of $32.00, indicating a potential upside of 37.69%. Arch Coal has a consensus price target of $100.29, indicating a potential downside of 0.28%. Given Alliance Holdings GP’s higher probable upside, equities analysts plainly believe Alliance Holdings GP is more favorable than Arch Coal.

Risk & Volatility

Alliance Holdings GP has a beta of 0.62, meaning that its share price is 38% less volatile than the S&P 500. Comparatively, Arch Coal has a beta of -0.14, meaning that its share price is 114% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Alliance Holdings GP 10.36% 16.54% 8.67%
Arch Coal N/A N/A N/A

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Alliance Holdings GP $1.80 billion 0.77 $185.98 million $3.20 7.26
Arch Coal $2.32 billion 0.91 $238.45 million $11.36 8.85

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

Dividends

Alliance Holdings GP pays an annual dividend of $2.97 per share and has a dividend yield of 12.8%. Arch Coal pays an annual dividend of $1.60 per share and has a dividend yield of 1.6%. 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. Arch Coal pays out 14.1% of its earnings in the form of a dividend.

Insider & Institutional Ownership

21.4% of Alliance Holdings GP shares are owned by institutional investors. Comparatively, 59.9% of Arch Coal shares are owned by institutional investors. 0.3% of Arch Coal 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.

Summary

Arch Coal beats Alliance Holdings GP on 10 of the 16 factors compared between the two stocks.

About Alliance Holdings GP

Alliance Holdings GP, L.P., together with its subsidiaries, produces and markets coal primarily to utilities and industrial users in the United States. It operates through Illinois Basin and Appalachia segments. The company operates eight underground mining complexes in Illinois, Indiana, Kentucky, Maryland, and West Virginia. It also leases land and operates a coal loading terminal on the Ohio River at Mt. Vernon, Indiana; and purchases and resells coal. In addition, the company offers various industrial and mining technology products and services; and miner and equipment tracking systems, and proximity detection systems. At December 31, 2017, it had approximately 1.76 billion tons of proven and probable coal reserves in Illinois, Indiana, Kentucky, Maryland, Pennsylvania, and West Virginia. Alliance GP, LLC serves as the general partner of the company. The company was founded in 2005 and is headquartered in Tulsa, Oklahoma.

About Arch Coal

Arch Coal, Inc. produces and sells thermal and metallurgical coal from surface and underground mines. As of December 31, 2017, the company operated 9 active mines located in Wyoming, West Virginia, Kentucky, Virginia, Colorado, and Illinois. It also owned or controlled, primarily through long-term leases, approximately 28,292 acres of coal land in Ohio; 1,060 acres of coal land in Maryland; 10,108 acres of coal land in Virginia; 359,160 acres of coal land in West Virginia; 98,488 acres of coal land in Wyoming; 267,857 acres of coal land in Illinois; 34,446 acres of coal land in Kentucky; 9,840 acres of coal land in Montana; 21,802 acres of coal land in New Mexico; 358 acres of coal land in Pennsylvania; and 20,165 acres of coal land in Colorado, as well as owned or controlled through long-term leases smaller parcels of property in Alabama, Indiana, Washington, Arkansas, California, Utah, and Texas. The company sells its products to utility, industrial, and steel producers in the United States and internationally. Arch Coal, Inc. was founded in 1969 and is headquartered in St. Louis, Missouri.

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