Alpha Appalachia (MEE) and CONSOL Coal Resources (CCR) Critical Review

Alpha Appalachia (NYSE: MEE) and CONSOL Coal Resources (NYSE:CCR) are both energy companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, institutional ownership, profitability, valuation, analyst recommendations, risk and dividends.

Dividends

CONSOL Coal Resources pays an annual dividend of $2.05 per share and has a dividend yield of 13.0%. Alpha Appalachia does not pay a dividend. CONSOL Coal Resources pays out 148.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Alpha Appalachia and CONSOL Coal Resources’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Alpha Appalachia N/A N/A N/A
CONSOL Coal Resources 9.94% 21.14% 6.62%

Earnings and Valuation

This table compares Alpha Appalachia and CONSOL Coal Resources’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Alpha Appalachia N/A N/A N/A ($2.05) N/A
CONSOL Coal Resources $281.12 million 1.54 $25.85 million $1.38 11.45

CONSOL Coal Resources has higher revenue and earnings than Alpha Appalachia. Alpha Appalachia is trading at a lower price-to-earnings ratio than CONSOL Coal Resources, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

25.6% of CONSOL Coal Resources shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings for Alpha Appalachia and CONSOL Coal Resources, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alpha Appalachia 0 0 0 0 N/A
CONSOL Coal Resources 0 2 5 0 2.71

CONSOL Coal Resources has a consensus target price of $20.20, suggesting a potential upside of 27.85%.

Summary

CONSOL Coal Resources beats Alpha Appalachia on 8 of the 9 factors compared between the two stocks.

About Alpha Appalachia

Massey Energy Company (Massey) is a coal producer in the United States. The Company produces, processes and sells bituminous coal of various steam and metallurgical grades, primarily of a low sulfur content, through its 25 processing and shipping centers (Resource Groups), many of which receive coal from multiple mines. At January 31, 2011, the Company operated 84 mines, including 66 underground mines (one of which employs both room and pillar and longwall mining) and 18 surface mines (with 12 highwall miners in operation) in West Virginia, Kentucky and Virginia. On April 19, 2010, the Company completed the acquisition of Cumberland Resources Corporation and certain affiliated entities (Cumberland). The Cumberland operations include primarily underground coal mines in Southwestern Virginia and Eastern Kentucky. The Company owns a majority interest in Coalsolv, LLC (Coalsolv).

About CONSOL Coal Resources

Consol Coal Resources LP, formerly CNX Coal Resources LP, is a producer of high-British thermal units (Btu) thermal coal. It is engaged in the management and development of coal operations of CONSOL Energy Inc. (CONSOL Energy) in Pennsylvania. It holds interest in, and operational control over, CONSOL Energy’s Pennsylvania Mining Complex, which consists of three underground mines and related infrastructure that produce high-Btu bituminous thermal coal that is sold primarily to electric utilities in the eastern United States. The Pennsylvania Mining Complex includes the Bailey Mine, the Enlow Fork Mine and the Harvey Mine. It mines its reserves from the Pittsburgh Number eight Coal Seam, which is a contiguous formation of uniform, Btu thermal coal. Its Bailey Mine is located in Enon, Pennsylvania. Its Enlow Fork Mine is located directly north of the Bailey Mine. Its Harvey Mine is located directly east of the Bailey and Enlow Fork Mines.

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