POSCO (NYSE:PKX) vs. SunCoke Energy (NYSE:SXC) Critical Analysis

SunCoke Energy (NYSE:SXC) and POSCO (NYSE:PKX) are both materials companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, profitability, institutional ownership, dividends, earnings and analyst recommendations.

Profitability

This table compares SunCoke Energy and POSCO’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SunCoke Energy	-2.91%	5.68%	2.01%
POSCO	1.49%	1.68%	0.99%

Dividends

SunCoke Energy pays an annual dividend of $0.48 per share and has a dividend yield of 5.0%. POSCO pays an annual dividend of $1.15 per share and has a dividend yield of 2.4%. SunCoke Energy pays out -73.8% of its earnings in the form of a dividend. POSCO pays out 43.6% 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. SunCoke Energy has raised its dividend for 4 consecutive years. SunCoke Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current ratings for SunCoke Energy and POSCO, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SunCoke Energy	0	2	0	0	2.00
POSCO	1	0	1	1	2.67

SunCoke Energy currently has a consensus target price of $11.00, indicating a potential upside of 13.58%. Given SunCoke Energy’s higher probable upside, equities research analysts clearly believe SunCoke Energy is more favorable than POSCO.

Volatility & Risk

SunCoke Energy has a beta of 0.94, meaning that its stock price is 6% less volatile than the S&P 500. Comparatively, POSCO has a beta of 1.75, meaning that its stock price is 75% more volatile than the S&P 500.

Earnings & Valuation

This table compares SunCoke Energy and POSCO”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SunCoke Energy	$1.84 billion	0.45	-$44.20 million	($0.65)	-14.90
POSCO	$48.64 billion	0.30	$483.48 million	$2.64	18.37

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

Insider and Institutional Ownership

90.5% of SunCoke Energy shares are owned by institutional investors. 1.7% of SunCoke Energy shares are owned by insiders. Comparatively, 0.0% of POSCO shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

About SunCoke Energy

SunCoke Energy, Inc. operates as an independent producer of coke in the Americas and Brazil. The company operates through three segments: Domestic Coke, Brazil Coke, and Logistics. It offers metallurgical and thermal coal. The company also provides handling and/or mixing services to steel, coke, electric utility, coal producing, and other manufacturing based customers. In addition, it owns and operates cokemaking facilities in the United States and Brazil. The company was founded in 1960 and is headquartered in Lisle, Illinois.

About POSCO

POSCO Holdings Inc., together with its subsidiaries, operates as an integrated steel producer in Korea and internationally. It operates through six segments: Steel, Trading, Construction, Logistics and Others, Green Materials and Energy, and Others. The company engages in the production, import, sale, and export of steel products, such as hot and cold rolled steel, stainless steel, plates, wire rods, and silicon steel sheets, as well as pig iron, billets, blooms, and slabs; trading of steel and raw materials, textiles, agricultural commodities, and other goods; natural resources development and power generation activities; and planning, designing, and construction of industrial plants, civil engineering projects, and commercial and residential buildings. It is also involved in the manufacture and sale of various energy-related and other industrial materials, including anode and cathode materials for rechargeable batteries; investment business; and provision of alternative environmentally-friendly energy solutions, as well as information technology and operational technology, and integrated logistics services. POSCO Holdings Inc. was incorporated in 1968 and is based in Seoul, South Korea.