Arch Coal (NYSE: ARCH) and Horsehead (OTCMKTS:ZINCQ) are both small-cap basic materials companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, risk, earnings, institutional ownership, profitability, analyst recommendations and dividends.

Profitability

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

Net Margins Return on Equity Return on Assets
Arch Coal N/A N/A N/A
Horsehead -35.52% N/A -37.34%

Dividends

Arch Coal pays an annual dividend of $1.40 per share and has a dividend yield of 1.6%. Horsehead does not pay a dividend.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Arch Coal and Horsehead, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Arch Coal 0 1 8 0 2.89
Horsehead 0 0 0 0 N/A

Arch Coal presently has a consensus price target of $93.00, indicating a potential upside of 5.61%. Given Arch Coal’s higher possible upside, research analysts clearly believe Arch Coal is more favorable than Horsehead.

Valuation and Earnings

This table compares Arch Coal and Horsehead’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Arch Coal $1.97 billion 0.98 $1.28 billion N/A N/A
Horsehead N/A N/A N/A ($13.24) 0.00

Arch Coal has higher revenue and earnings than Horsehead.

Institutional and Insider Ownership

37.0% of Arch Coal shares are held by institutional investors. 1.3% of Arch Coal shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

Arch Coal beats Horsehead on 8 of the 8 factors compared between the two stocks.

Arch Coal Company Profile

Arch Coal, Inc. is a coal producer. The Company is engaged in the production of thermal and metallurgical coal from surface and underground mines located throughout the United States, for sale to utility, industrial and steel producers both in the United States and around the world. The Company operates mining complexes in West Virginia, Kentucky, Maryland, Virginia, Illinois, Wyoming and Colorado. The Company’s segments include the Powder River Basin and Appalachia. The Powder River Basin segment includes operations in Wyoming. The Appalachia segment includes operations in West Virginia, Kentucky, Maryland and Virginia. The Company also sells coal from operations in Colorado and Illinois. Powder River Basin consists of Black Thunder and Coal Creek mines. The Company’s mines in Appalachia include Coal-Mac, Lone Mountain, Mountain Laurel, Beckley, Vindex, Sentinel and Leer. The Company operates, or contracts out the operation of approximately 10 active mines in the United States.

Horsehead Company Profile

Horsehead Holding Corp. is a producer of zinc and nickel-based products sold primarily to customers throughout the United States and Canada. The Company is also a recycler of electric arc furnace (EAF) dust in the United States and a recycler of hazardous and non-hazardous waste for the specialty steel industry. It operates in three segments, which include Horsehead, Zochem and INMETCO. Horsehead is engaged in producing zinc metal and recycling of EAF dust. Zochem is engaged in producing zinc oxide in North America. INMETCO is engaged in recycling of nickel-bearing waste generated by the stainless and specialty steel producers, and recycling of nickel-cadmium and other types of batteries in North America. The Company’s products are used in a range of applications, including in the galvanizing of sheet and fabricated steel products, as components in rubber tires, alkaline batteries, paint, chemicals and pharmaceuticals and as a remelt alloy in the production of stainless steel.

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