SunCoke Energy Partners (NYSE: SXCP) and Gerdau (NYSE:GGB) are both basic materials companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, risk, earnings, profitability, valuation and dividends.
Volatility and Risk
SunCoke Energy Partners has a beta of 1.28, meaning that its share price is 28% more volatile than the S&P 500. Comparatively, Gerdau has a beta of 2.27, meaning that its share price is 127% more volatile than the S&P 500.
This is a breakdown of recent ratings and price targets for SunCoke Energy Partners and Gerdau, as provided by MarketBeat.com.
||Strong Buy Ratings
|SunCoke Energy Partners
Gerdau has a consensus price target of $4.00, suggesting a potential downside of 14.16%. Given Gerdau’s higher probable upside, analysts clearly believe Gerdau is more favorable than SunCoke Energy Partners.
SunCoke Energy Partners pays an annual dividend of $2.38 per share and has a dividend yield of 12.2%. Gerdau pays an annual dividend of $0.01 per share and has a dividend yield of 0.2%. SunCoke Energy Partners pays out -128.6% of its earnings in the form of a dividend. Gerdau pays out -3.3% 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 has increased its dividend for 2 consecutive years. SunCoke Energy Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Insider & Institutional Ownership
13.3% of SunCoke Energy Partners shares are owned by institutional investors. Comparatively, 4.9% of Gerdau shares are owned by institutional investors. 0.0% of Gerdau shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Earnings & Valuation
This table compares SunCoke Energy Partners and Gerdau’s gross revenue, earnings per share and valuation.
||Earnings Per Share
|SunCoke Energy Partners
SunCoke Energy Partners has higher earnings, but lower revenue than Gerdau. Gerdau is trading at a lower price-to-earnings ratio than SunCoke Energy Partners, indicating that it is currently the more affordable of the two stocks.
This table compares SunCoke Energy Partners and Gerdau’s net margins, return on equity and return on assets.
||Return on Equity
||Return on Assets
|SunCoke Energy Partners
SunCoke Energy Partners beats Gerdau on 10 of the 17 factors compared between the two stocks.
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.
Gerdau S.A. (Gerdau) is a manufacturer of long steel in the North and South America. The Company is engaged in the production and commercialization of steel products in general, through its mills located in Argentina, Brazil, Canada, Chile, Colombia, Spain, the United States, Guatemala, India, Mexico, Peru, the Dominican Republic, Uruguay and Venezuela. Its segments are Brazil Operations, which includes operations of steel and iron ore in Brazil, except Special Steels, and the operation of metallurgical coal and coke in Colombia; North America Operations, which includes all operations in North America, except those of Mexico and Special Steels; South America Operations, which includes operations in South America, except Brazil and the operation of metallurgical coal and coke in Colombia, and Special Steel Operations, including special steel operations in Brazil, Spain, the United States and India. It supplies its customers a range of products, including iron ore semi-finished products.
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