Analyzing SunCoke Energy Partners, L.P. (SXCP) and Olympic Steel (ZEUS)

SunCoke Energy Partners, L.P. (NYSE: SXCP) and Olympic Steel (NASDAQ:ZEUS) are both small-cap oils/energy companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, risk, valuation, earnings, institutional ownership, analyst recommendations and profitability.

Valuation & Earnings

This table compares SunCoke Energy Partners, L.P. and Olympic Steel’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
SunCoke Energy Partners, L.P. $779.70 million 1.05 $119.10 million ($1.84) -9.62
Olympic Steel $1.06 billion 0.20 -$1.07 million $1.11 17.48

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

Analyst Recommendations

This is a breakdown of recent ratings and target prices for SunCoke Energy Partners, L.P. and Olympic Steel, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SunCoke Energy Partners, L.P. 0 0 1 0 3.00
Olympic Steel 0 2 1 0 2.33

Olympic Steel has a consensus price target of $23.50, suggesting a potential upside of 21.13%. Given Olympic Steel’s higher probable upside, analysts clearly believe Olympic Steel is more favorable than SunCoke Energy Partners, L.P..

Insider and Institutional Ownership

15.6% of SunCoke Energy Partners, L.P. shares are owned by institutional investors. Comparatively, 68.3% of Olympic Steel shares are owned by institutional investors. 18.3% of Olympic Steel shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares SunCoke Energy Partners, L.P. and Olympic Steel’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SunCoke Energy Partners, L.P. -9.04% 15.35% 5.55%
Olympic Steel 0.99% 4.32% 1.89%

Dividends

SunCoke Energy Partners, L.P. pays an annual dividend of $2.38 per share and has a dividend yield of 13.4%. Olympic Steel pays an annual dividend of $0.08 per share and has a dividend yield of 0.4%. SunCoke Energy Partners, L.P. pays out -129.3% of its earnings in the form of a dividend. Olympic Steel pays out 7.2% 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 Partners, L.P. is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

SunCoke Energy Partners, L.P. has a beta of 1.31, meaning that its share price is 31% more volatile than the S&P 500. Comparatively, Olympic Steel has a beta of 1.77, meaning that its share price is 77% more volatile than the S&P 500.

Summary

Olympic Steel beats SunCoke Energy Partners, L.P. on 8 of the 15 factors compared between the two stocks.

SunCoke Energy Partners, L.P. Company Profile

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.

Olympic Steel Company Profile

Olympic Steel, Inc. is a metals service center. The Company provides metals processing and distribution services for a range of customers. The Company operates through three segments: carbon flat products, specialty metals flat products, and tubular and pipe products. The Company’s carbon flat products segment’s focus is on the direct sale and distribution of large volumes of processed carbon and coated flat-rolled sheet, coil and plate products and fabricated parts. The Company’s specialty metals flat products segment’s focus is on the direct sale and distribution of processed aluminum and stainless flat-rolled sheet and coil products, flat bar products and fabricated parts. The Company’s tubular and pipe products segment consists of the Chicago Tube and Iron Company (CTI) business. Through its tubular and pipe products segment, it distributes metals tubing, pipe, bar, valve and fittings, and fabricate pressure parts supplied to various industrial markets.

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