Analyzing Peabody Energy (BTU) & Arch Coal, Inc. Class A (ARCH)

Peabody Energy (NYSE: BTU) and Arch Coal, Inc. Class A (NYSE:ARCH) are both mid-cap oils/energy companies, but which is the better business? We will compare the two companies based on the strength of their earnings, valuation, risk, institutional ownership, dividends, profitability and analyst recommendations.

Profitability

This table compares Peabody Energy and Arch Coal, Inc. Class A’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Peabody Energy 4.60% 19.92% 2.74%
Arch Coal, Inc. Class A N/A N/A N/A

Institutional & Insider Ownership

95.2% of Peabody Energy shares are owned by institutional investors. 1.3% of Arch Coal, Inc. Class A shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Peabody Energy and Arch Coal, Inc. Class A, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Peabody Energy 0 2 7 0 2.78
Arch Coal, Inc. Class A 0 1 8 0 2.89

Peabody Energy currently has a consensus target price of $36.25, indicating a potential downside of 10.05%. Arch Coal, Inc. Class A has a consensus target price of $93.00, indicating a potential downside of 5.76%. Given Arch Coal, Inc. Class A’s stronger consensus rating and higher probable upside, analysts clearly believe Arch Coal, Inc. Class A is more favorable than Peabody Energy.

Dividends

Arch Coal, Inc. Class A pays an annual dividend of $1.40 per share and has a dividend yield of 1.4%. Peabody Energy does not pay a dividend.

Earnings & Valuation

This table compares Peabody Energy and Arch Coal, Inc. Class A’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Peabody Energy $4.72 billion 0.89 -$729.30 million N/A N/A
Arch Coal, Inc. Class A $1.97 billion 1.10 $1.28 billion N/A N/A

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

Summary

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

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.

Arch Coal, Inc. Class A 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.

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