Analyzing Arch Resources (NYSE:ARCH) and NACCO Industries (NYSE:NC)

Arch Resources (NYSE:ARCHGet Rating) and NACCO Industries (NYSE:NCGet Rating) are both oils/energy companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, risk, valuation, profitability, analyst recommendations, earnings and dividends.

Insider & Institutional Ownership

50.3% of NACCO Industries shares are held by institutional investors. 8.0% of Arch Resources shares are held by insiders. Comparatively, 40.7% of NACCO Industries shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Arch Resources and NACCO Industries, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Arch Resources 0 1 2 0 2.67
NACCO Industries 0 0 0 0 N/A

Arch Resources currently has a consensus target price of $137.00, indicating a potential downside of 16.16%. Given Arch Resources’ higher probable upside, equities research analysts clearly believe Arch Resources is more favorable than NACCO Industries.

Earnings and Valuation

This table compares Arch Resources and NACCO Industries’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Arch Resources $2.21 billion 1.15 $337.57 million $31.39 5.21
NACCO Industries $191.85 million 1.99 $48.13 million $7.17 7.25

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

Risk & Volatility

Arch Resources has a beta of 0.63, indicating that its share price is 37% less volatile than the S&P 500. Comparatively, NACCO Industries has a beta of 0.86, indicating that its share price is 14% less volatile than the S&P 500.

Profitability

This table compares Arch Resources and NACCO Industries’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Arch Resources 22.64% 109.29% 32.01%
NACCO Industries 25.65% 15.07% 10.44%

Dividends

Arch Resources pays an annual dividend of $1.00 per share and has a dividend yield of 0.6%. NACCO Industries pays an annual dividend of $0.79 per share and has a dividend yield of 1.5%. Arch Resources pays out 3.2% of its earnings in the form of a dividend. NACCO Industries pays out 11.0% 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. NACCO Industries has raised its dividend for 37 consecutive years. NACCO Industries is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

About Arch Resources (Get Rating)

Arch Resources, Inc. produces and sells thermal and metallurgical coal from surface and underground mines. As of December 31, 2021, the company operated seven active mines. It also owned or controlled primarily through long-term leases approximately 28,292 acres of coal land in Ohio; 952 acres of coal land in Maryland; 10,095 acres of coal land in Virginia; 306,033 acres of coal land in West Virginia; 81,470 acres of coal land in Wyoming; 234,543 acres of coal land in Illinois; 33,047 acres of coal land in Kentucky; 362 acres of coal land in Montana; 248 acres of coal land in Pennsylvania; and 19,018 acres of coal land in Colorado, as well as 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, Europe, Asia, Central and South America, and Africa. The company was formerly known as Arch Coal, Inc. and changed its name to Arch Resources, Inc. in May 2020. Arch Resources, Inc. was incorporated in 1969 and is headquartered in St. Louis, Missouri.

About NACCO Industries (Get Rating)

NACCO Industries, Inc., together with its subsidiaries, engages in the natural resources business. The company operates through three segments: Coal Mining, North American Mining, and Minerals Management. The Coal Mining segment operates surface coal mines under long-term contracts for power generation companies and an activated carbon producer in North Dakota, Texas, Mississippi, and Louisiana in the United States, as well as Navajo Nation in New Mexico. The North American Mining segment provides value-added contract mining and other services for producers of aggregates, lithium, and other minerals; and contract mining services for independently owned mines and quarries in Florida, Texas, Arkansas, and Indiana. The Minerals Management segment is involved in the leasing of its royalty and mineral interests to third-party exploration and production companies, and other mining companies, which grants them the rights to explore, develop, mine, produce, market, and sell gas, oil, and coal. The company was founded in 1913 and is headquartered in Cleveland, Ohio.

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