Critical Contrast: Westmoreland Coal (WLB) versus Arch Coal (ARCH)

Westmoreland Coal (NASDAQ: WLB) and Arch Coal (NYSE:ARCH) are both oils/energy companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, earnings, analyst recommendations, dividends, institutional ownership, valuation and risk.

Dividends

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Arch Coal pays an annual dividend of $1.60 per share and has a dividend yield of 1.6%. Westmoreland Coal does not pay a dividend. Arch Coal pays out 14.1% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of current ratings for Westmoreland Coal and Arch Coal, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Westmoreland Coal 0 1 2 0 2.67
Arch Coal 0 2 7 0 2.78

Westmoreland Coal presently has a consensus target price of $6.00, indicating a potential upside of 1,968.97%. Arch Coal has a consensus target price of $100.29, indicating a potential downside of 0.28%. Given Westmoreland Coal’s higher probable upside, equities research analysts plainly believe Westmoreland Coal is more favorable than Arch Coal.

Volatility & Risk

Westmoreland Coal has a beta of 1, meaning that its stock price has a similar volatility profile to the S&P 500.Comparatively, Arch Coal has a beta of -0.14, meaning that its stock price is 114% less volatile than the S&P 500.

Profitability

This table compares Westmoreland Coal and Arch Coal’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Westmoreland Coal -5.15% N/A -4.92%
Arch Coal N/A N/A N/A

Institutional and Insider Ownership

51.0% of Westmoreland Coal shares are owned by institutional investors. Comparatively, 59.9% of Arch Coal shares are owned by institutional investors. 1.4% of Westmoreland Coal shares are owned by company insiders. Comparatively, 0.3% of Arch Coal shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Westmoreland Coal and Arch Coal’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Westmoreland Coal $1.38 billion 0.00 -$71.34 million ($3.82) -0.08
Arch Coal $2.32 billion 0.91 $238.45 million $11.36 8.85

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

Summary

Arch Coal beats Westmoreland Coal on 11 of the 15 factors compared between the two stocks.

About Westmoreland Coal

Westmoreland Coal Company, through its subsidiaries, operates as an energy company. The company operates through Coal – U.S., Coal – Canada, Coal – WMLP, and Power segments. It produces and sells sub-bituminous coal and lignite to power plants. The company owns and operates coal mines in Montana, North Dakota, Ohio, and Texas, the United States; and Alberta and Saskatchewan, Canada. It has total proven or probable coal reserves of approximately 888,202 thousands of tons. The company is also involved in the production of electricity. It operates two coal-fired power generating units with a total capacity of approximately 230 megawatts in Weldon, North Carolina. Westmoreland Coal Company was founded in 1854 and is headquartered in Englewood, Colorado.

About Arch Coal

Arch Coal, Inc. produces and sells thermal and metallurgical coal from surface and underground mines. As of December 31, 2017, the company operated 9 active mines located in Wyoming, West Virginia, Kentucky, Virginia, Colorado, and Illinois. It also owned or controlled, primarily through long-term leases, approximately 28,292 acres of coal land in Ohio; 1,060 acres of coal land in Maryland; 10,108 acres of coal land in Virginia; 359,160 acres of coal land in West Virginia; 98,488 acres of coal land in Wyoming; 267,857 acres of coal land in Illinois; 34,446 acres of coal land in Kentucky; 9,840 acres of coal land in Montana; 21,802 acres of coal land in New Mexico; 358 acres of coal land in Pennsylvania; and 20,165 acres of coal land in Colorado, as well as owned or controlled through long-term leases smaller parcels of property in Alabama, Indiana, Washington, Arkansas, California, Utah, and Texas. The company sells its products to utility, industrial, and steel producers in the United States and internationally. Arch Coal, Inc. was founded in 1969 and is headquartered in St. Louis, Missouri.

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