Salzgitter (OTCMKTS:SZGPY) vs. SunCoke Energy (NYSE:SXC) Critical Review

Salzgitter (OTCMKTS:SZGPY) and SunCoke Energy (NYSE:SXC) are both materials companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, dividends, earnings, profitability, analyst recommendations, valuation and risk.

Institutional & Insider Ownership

90.5% of SunCoke Energy shares are owned by institutional investors. 1.7% of SunCoke Energy 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.

Earnings & Valuation

This table compares Salzgitter and SunCoke Energy”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Salzgitter	$10.16 billion	0.28	-$83.95 million	$0.12	44.29
SunCoke Energy	$1.84 billion	0.47	-$44.20 million	($0.64)	-15.79

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

Profitability

This table compares Salzgitter and SunCoke Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Salzgitter	0.65%	1.29%	0.54%
SunCoke Energy	-2.88%	6.37%	2.28%

Volatility & Risk

Salzgitter has a beta of 1.7, indicating that its stock price is 70% more volatile than the S&P 500. Comparatively, SunCoke Energy has a beta of 1.01, indicating that its stock price is 1% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Salzgitter and SunCoke Energy, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Salzgitter	0	2	5	0	2.71
SunCoke Energy	0	2	0	0	2.00

SunCoke Energy has a consensus price target of $9.00, indicating a potential downside of 10.94%. Given SunCoke Energy’s higher probable upside, analysts clearly believe SunCoke Energy is more favorable than Salzgitter.

Dividends

Salzgitter pays an annual dividend of $0.01 per share and has a dividend yield of 0.2%. SunCoke Energy pays an annual dividend of $0.48 per share and has a dividend yield of 4.8%. Salzgitter pays out 8.3% of its earnings in the form of a dividend. SunCoke Energy pays out -75.0% 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. SunCoke Energy has increased its dividend for 4 consecutive years. SunCoke Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

SunCoke Energy beats Salzgitter on 10 of the 17 factors compared between the two stocks.

About Salzgitter

Salzgitter AG, together with its subsidiaries, engages in steel and technology businesses worldwide. It operates through four segments: Steel Production, Steel Processing, Trading, and Technology. The Steel Production segment manufactures steel and special steels, such as hot-rolled wide strip, steel sheet, sections, tailored blanks, as well as scrap trading. The Steel Processing segment produces various high-grade heavy plates; and manufactures line pipes, HFI-welded tubes, and precision and stainless-steel tubes. The Trading segment operates a European sales network, as well as trading companies and agencies worldwide. The Technology segment engages in the provision of machinery and plants for the filling and packaging of beverages, as well as special machinery engineering for shoe manufacturing and elastomer production. The company also provides IT, facility management, logistics, automotive engineering, and research and development services, as well as supplies raw materials. The company was founded in 1858 and is headquartered in Salzgitter, Germany.

About SunCoke Energy

SunCoke Energy, Inc. operates as an independent producer of coke in the Americas and Brazil. The company operates through three segments: Domestic Coke, Brazil Coke, and Logistics. It offers metallurgical and thermal coal. The company also provides handling and/or mixing services to steel, coke, electric utility, coal producing, and other manufacturing based customers. In addition, it owns and operates cokemaking facilities in the United States and Brazil. The company was founded in 1960 and is headquartered in Lisle, Illinois.