Alliance Holdings GP, L.P. (NASDAQ: AHGP) and Alliance Resource Partners, L.P. (NASDAQ:ARLP) are both small-cap oils/energy companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, dividends, analyst recommendations, profitabiliy, valuation, risk and earnings.

Insider & Institutional Ownership

24.5% of Alliance Holdings GP, L.P. shares are owned by institutional investors. Comparatively, 26.3% of Alliance Resource Partners, L.P. shares are owned by institutional investors. 44.0% of Alliance Resource Partners, L.P. shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

Alliance Holdings GP, L.P. pays an annual dividend of $2.20 per share and has a dividend yield of 8.2%. Alliance Resource Partners, L.P. pays an annual dividend of $2.00 per share and has a dividend yield of 10.6%. Alliance Holdings GP, L.P. pays out 63.6% of its earnings in the form of a dividend. Alliance Resource Partners, L.P. pays out 48.4% 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. Alliance Resource Partners, L.P. is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

Alliance Holdings GP, L.P. has a beta of 0.53, meaning that its share price is 47% less volatile than the S&P 500. Comparatively, Alliance Resource Partners, L.P. has a beta of 0.68, meaning that its share price is 32% less volatile than the S&P 500.

Valuation & Earnings

This table compares Alliance Holdings GP, L.P. and Alliance Resource Partners, L.P.’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Alliance Holdings GP, L.P. $1.94 billion 0.83 $710.69 million $3.46 7.80
Alliance Resource Partners, L.P. $1.94 billion 0.73 $713.15 million $4.13 4.58

Alliance Resource Partners, L.P. 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.

Profitability

This table compares Alliance Holdings GP, L.P. and Alliance Resource Partners, L.P.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Alliance Holdings GP, L.P. 10.69% 19.15% 9.62%
Alliance Resource Partners, L.P. 19.47% 34.60% 17.36%

Analyst Ratings

This is a breakdown of current ratings and target prices for Alliance Holdings GP, L.P. and Alliance Resource Partners, L.P., as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alliance Holdings GP, L.P. 0 0 0 0 N/A
Alliance Resource Partners, L.P. 0 1 3 0 2.75

Alliance Resource Partners, L.P. has a consensus target price of $27.75, suggesting a potential upside of 46.83%. Given Alliance Resource Partners, L.P.’s higher probable upside, analysts plainly believe Alliance Resource Partners, L.P. is more favorable than Alliance Holdings GP, L.P..

Summary

Alliance Resource Partners, L.P. beats Alliance Holdings GP, L.P. on 12 of the 14 factors compared between the two stocks.

Alliance Holdings GP, L.P. Company Profile

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.

Alliance Resource Partners, L.P. Company Profile

Alliance Resource Partners, L.P. is a producer and marketer of coal primarily to the United States utilities and industrial users. The Company operates through segments, including Illinois Basin, Appalachia, and Other and Corporate. The Illinois Basin segment consists of various operating segments, including Webster County Coal, LLC’s Dotiki mining complex, Gibson County Coal, LLC’s mining complex, which includes the Gibson North mine and Gibson South mine, Hopkins County Coal, LLC’s mining complex, which includes the Elk Creek mine, the Pleasant View surface mineable reserves and the Fies property, White County Coal, LLC’s, Pattiki mining complex, Warrior Coal, LLC’s mining complex, Sebree Mining, LLC’s mining complex, which includes the Onton mine and River View Coal, LLC mining complex. The Appalachia segment consists of multiple operating segments, including the Mettiki mining complex, the Tunnel Ridge mining complex and the MC Mining mining complex.

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