Foresight Energy (NYSE: FELP) and Alliance Resource Partners, L.P. (NASDAQ:ARLP) are both oils/energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, dividends, profitability, institutional ownership, analyst recommendations, risk and valuation.

Profitability

This table compares Foresight Energy and Alliance Resource Partners, L.P.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Foresight Energy -21.13% -15.37% -2.78%
Alliance Resource Partners, L.P. 19.47% 34.60% 17.36%

Dividends

Foresight Energy pays an annual dividend of $0.26 per share and has a dividend yield of 6.3%. Alliance Resource Partners, L.P. pays an annual dividend of $2.00 per share and has a dividend yield of 10.5%. Foresight Energy pays out -14.4% of its earnings in the form of a dividend. Alliance Resource Partners, L.P. pays out 48.4% 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.

Volatility and Risk

Foresight Energy has a beta of 0.8, indicating that its share price is 20% less volatile than the S&P 500. Comparatively, Alliance Resource Partners, L.P. has a beta of 0.69, indicating that its share price is 31% less volatile than the S&P 500.

Valuation and Earnings

This table compares Foresight Energy and Alliance Resource Partners, L.P.’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Foresight Energy $921.23 million 0.64 $186.23 million ($1.81) -2.29
Alliance Resource Partners, L.P. $1.94 billion N/A $713.15 million $4.13 4.61

Alliance Resource Partners, L.P. has higher revenue and earnings than Foresight Energy. Foresight Energy is trading at a lower price-to-earnings ratio than Alliance Resource Partners, L.P., indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

11.7% of Foresight Energy shares are held by institutional investors. Comparatively, 16.1% of Alliance Resource Partners, L.P. shares are held by institutional investors. 44.0% of Alliance Resource Partners, L.P. shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Foresight Energy and Alliance Resource Partners, L.P., as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Foresight Energy 0 2 0 0 2.00
Alliance Resource Partners, L.P. 0 1 3 0 2.75

Foresight Energy presently has a consensus price target of $5.25, suggesting a potential upside of 26.81%. Alliance Resource Partners, L.P. has a consensus price target of $27.75, suggesting a potential upside of 45.67%. Given Alliance Resource Partners, L.P.’s stronger consensus rating and higher probable upside, analysts clearly believe Alliance Resource Partners, L.P. is more favorable than Foresight Energy.

Summary

Alliance Resource Partners, L.P. beats Foresight Energy on 12 of the 14 factors compared between the two stocks.

Foresight Energy Company Profile

Foresight Energy LP is engaged in the mining and marketing of coal from reserves and operations located in the Illinois Basin. As of December 31, 2016, the Company controlled 2.1 billion tons of coal in the state of Illinois. Its reserves consist principally of three contiguous blocks of uniform, thick, high heat content (high Btu) thermal coal, which are used for longwall operations. The Company operates four underground mining complexes in the Illinois Basin, including Williamson, Sugar Camp, Hillsboro and Macoupin. Its mining complexes operate in the Illinois Basin with approximately two located in Southern Illinois and over two located in Central Illinois. Williamson, Sugar Camp and Hillsboro are longwall operations, and Macoupin is a continuous miner operation. The Company markets and sells its coal to electric utility and industrial companies in the eastern half of the United States as well as internationally (primarily into Europe).

Alliance Resource Partners, L.P. Company Profile

Alliance Resource Partners, L.P. is a producer and marketer of coal primarily to the United States utilities and industrial users. The Company operates through segments, including Illinois Basin, Appalachia, and Other and Corporate. The Illinois Basin segment consists of various operating segments, including Webster County Coal, LLC’s Dotiki mining complex, Gibson County Coal, LLC’s mining complex, which includes the Gibson North mine and Gibson South mine, Hopkins County Coal, LLC’s mining complex, which includes the Elk Creek mine, the Pleasant View surface mineable reserves and the Fies property, White County Coal, LLC’s, Pattiki mining complex, Warrior Coal, LLC’s mining complex, Sebree Mining, LLC’s mining complex, which includes the Onton mine and River View Coal, LLC mining complex. The Appalachia segment consists of multiple operating segments, including the Mettiki mining complex, the Tunnel Ridge mining complex and the MC Mining mining complex.

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