Arch Coal (NYSE: ARCH) and Peabody Energy (NYSE:BTU) are both basic materials companies, but which is the better investment? We will compare the two companies based on the strength of their valuation, institutional ownership, profitability, earnings, dividends, risk and analyst recommendations.

Dividends

Arch Coal pays an annual dividend of $1.40 per share and has a dividend yield of 1.6%. Peabody Energy does not pay a dividend.

Valuation and Earnings

This table compares Arch Coal and Peabody Energy’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Arch Coal $1.97 billion 0.95 $1.28 billion N/A N/A
Peabody Energy $4.72 billion 0.79 -$729.30 million N/A N/A

Arch Coal has higher earnings, but lower revenue than Peabody Energy.

Profitability

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 N/A N/A N/A
Peabody Energy 4.60% 19.92% 2.74%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Arch Coal and Peabody Energy, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Arch Coal 0 1 8 0 2.89
Peabody Energy 0 2 7 0 2.78

Arch Coal currently has a consensus target price of $93.00, indicating a potential upside of 8.92%. Peabody Energy has a consensus target price of $36.25, indicating a potential upside of 1.20%. Given Arch Coal’s stronger consensus rating and higher probable upside, analysts clearly believe Arch Coal is more favorable than Peabody Energy.

Insider & Institutional Ownership

95.2% 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, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Arch Coal beats Peabody Energy on 7 of the 12 factors compared between the two stocks.

Arch Coal Company Profile

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.

Peabody Energy Company Profile

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.

Receive News & Ratings for Arch Coal Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Arch Coal and related companies with MarketBeat.com's FREE daily email newsletter.