NACCO Industries (NYSE: NC) and Natural Resource Partners (NYSE:NRP) are both small-cap energy companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, dividends, institutional ownership, risk, profitability, analyst recommendations and earnings.

Dividends

NACCO Industries pays an annual dividend of $1.98 per share and has a dividend yield of 4.8%. Natural Resource Partners pays an annual dividend of $1.80 per share and has a dividend yield of 7.3%. NACCO Industries pays out 31.6% of its earnings in the form of a dividend. Natural Resource Partners pays out 72.0% 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. Natural Resource Partners has raised its dividend for 3 consecutive years. Natural Resource Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent ratings and target prices for NACCO Industries and Natural Resource Partners, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NACCO Industries 0 0 0 0 N/A
Natural Resource Partners 0 1 0 0 2.00

Natural Resource Partners has a consensus price target of $31.00, suggesting a potential upside of 26.27%. Given Natural Resource Partners’ higher possible upside, analysts plainly believe Natural Resource Partners is more favorable than NACCO Industries.

Valuation and Earnings

This table compares NACCO Industries and Natural Resource Partners’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NACCO Industries $856.44 million 0.33 $29.60 million $6.26 6.54
Natural Resource Partners $400.06 million 0.75 $96.89 million $2.50 9.82

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

Insider & Institutional Ownership

48.6% of NACCO Industries shares are held by institutional investors. Comparatively, 22.6% of Natural Resource Partners shares are held by institutional investors. 30.6% of NACCO Industries shares are held by insiders. Comparatively, 39.0% of Natural Resource Partners shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares NACCO Industries and Natural Resource Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NACCO Industries 6.75% 18.54% 7.13%
Natural Resource Partners 26.38% 34.32% 4.38%

Risk and Volatility

NACCO Industries has a beta of 0.44, meaning that its stock price is 56% less volatile than the S&P 500. Comparatively, Natural Resource Partners has a beta of 0.7, meaning that its stock price is 30% less volatile than the S&P 500.

Summary

Natural Resource Partners beats NACCO Industries on 10 of the 15 factors compared between the two stocks.

NACCO Industries Company Profile

NACCO Industries, Inc. is a holding company. The Company’s principal business includes mining. The Company operates through the NACoal segment. The Company’s subsidiary includes The North American Coal Corporation (NACoal). The Company’s NACoal segment mines coal for use in power generation and provides mining services for other natural resources companies. Coal is surface mined from NACoal’s mines in North Dakota, Texas, Mississippi, Louisiana and the Navajo Nation in New Mexico. NACoal’s operating coal mining subsidiaries include Bisti Fuels Company, LLC (Bisti), Caddo Creek Resources Company, LLC (Caddo Creek), Camino Real Fuels, LLC (Camino Real), The Coteau Properties Company (Coteau), Coyote Creek Mining Company, LLC (Coyote Creek), Demery Resources Company, LLC (Demery), The Falkirk Mining Company (Falkirk), Liberty Fuels Company, LLC (Liberty), Mississippi Lignite Mining Company (MLMC) and The Sabine Mining Company (Sabine).

Natural Resource Partners Company Profile

Natural Resource Partners L.P. owns, operates, manages and leases a portfolio of mineral properties in the United States, including interests in coal, trona and soda ash, construction aggregates and other natural resources. Coal Royalty and Other segment consists primarily of coal royalty and coal related transportation and processing assets. As of December 31, 2016, Soda Ash segment included the Company’s 49% non-controlling equity interest in Ciner Wyoming, a trona ore mining operation and soda ash refinery in the Green River Basin, Wyoming. VantaCore’s operating businesses include Laurel Aggregates, located in Lake Lynn, Pennsylvania; Winn Materials/McIntosh Construction, located in Clarksville, Tennessee; Grand Rivers, located in Grand Rivers, Kentucky, and Southern Aggregates, located near Baton Rouge, Louisiana.

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