Nucor (NYSE: NUE) and SunCoke Energy Partners (NYSE:SXCP) are both basic materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, dividends, institutional ownership, valuation and risk.

Volatility and Risk

Nucor has a beta of 1.56, suggesting that its stock price is 56% more volatile than the S&P 500. Comparatively, SunCoke Energy Partners has a beta of 1.37, suggesting that its stock price is 37% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Nucor and SunCoke Energy Partners, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nucor 0 5 9 0 2.64
SunCoke Energy Partners 0 0 1 0 3.00

Nucor presently has a consensus target price of $69.47, indicating a potential upside of 12.46%. Given Nucor’s higher probable upside, equities research analysts clearly believe Nucor is more favorable than SunCoke Energy Partners.

Insider & Institutional Ownership

74.3% of Nucor shares are owned by institutional investors. Comparatively, 13.3% of SunCoke Energy Partners shares are owned by institutional investors. 0.7% of Nucor shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Nucor pays an annual dividend of $1.52 per share and has a dividend yield of 2.5%. SunCoke Energy Partners pays an annual dividend of $2.38 per share and has a dividend yield of 12.9%. Nucor pays out 37.1% of its earnings in the form of a dividend. SunCoke Energy Partners pays out -432.7% 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. Nucor has increased its dividend for 2 consecutive years and SunCoke Energy Partners has increased its dividend for 44 consecutive years. SunCoke Energy Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Nucor and SunCoke Energy Partners’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Nucor $20.25 billion 0.97 $1.32 billion $4.10 15.07
SunCoke Energy Partners $845.60 million 1.01 -$18.10 million ($0.55) -33.45

Nucor has higher revenue and earnings than SunCoke Energy Partners. SunCoke Energy Partners is trading at a lower price-to-earnings ratio than Nucor, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Nucor and SunCoke Energy Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Nucor 6.58% 13.03% 7.11%
SunCoke Energy Partners -2.28% 14.57% 4.86%

Summary

Nucor beats SunCoke Energy Partners on 11 of the 17 factors compared between the two stocks.

About Nucor

Nucor Corporation (Nucor) manufactures steel and steel products. The Company produces direct reduced iron (DRI) for use in its steel mills. It operates in three segments: steel mills, steel products and raw materials. The steel mills segment produces and distributes sheet steel (hot-rolled, cold-rolled and galvanized), plate steel, structural steel (wide-flange beams, beam blanks, H-piling and sheet piling) and bar steel (blooms, billets, concrete reinforcing bar, merchant bar, wire rod and special bar quality). The steel products segment produces steel joists and joist girders, steel deck, fabricated concrete reinforcing steel and cold finished steel. The raw materials produces DRI; brokers ferrous and nonferrous metals, pig iron, HBI and DRI; supplies ferro-alloys, and processes ferrous and nonferrous scrap metal. It also processes ferrous and nonferrous metals and brokers ferrous and nonferrous metals, pig iron, hot briquetted iron (HBI) and DRI.

About SunCoke Energy Partners

SunCoke Energy Partners, L.P. is engaged in the production of coke used in the blast furnace production of steel. As of December 31, 2016, the Company owned a 98% interest in Haverhill Coke Company LLC (Haverhill), Middletown Coke Company, LLC (Middletown), and Gateway Energy and Coke Company, LLC (Granite City). The Company’s segments include Domestic Coke, which consists of the Haverhill, Middletown and Granite City cokemaking and heat recovery operations located in Franklin Furnace, Ohio; Middletown, Ohio, and Granite City, Illinois, respectively, and Coal Logistics, which consists of the Company’s Convent Marine Terminal, Kanawha River Terminals, LLC and SunCoke Lake Terminal, LLC (Lake Terminal) coal handling and/or mixing service operations in Convent, Louisiana; Ceredo and Belle, West Virginia, and East Chicago, Indiana, respectively. It also provides coal handling and/or mixing services at its Coal Logistics terminals to steel, coke, electric utility and coal mining customers.

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