NACCO Industries (NC) & Foresight Energy (FELP) Critical Comparison

NACCO Industries (NYSE: NC) and Foresight Energy (NYSE:FELP) are both consumer discretionary companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, earnings, risk, institutional ownership, valuation and profitability.

Earnings & Valuation

This table compares NACCO Industries and Foresight Energy’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
NACCO Industries $856.44 million 0.31 $29.60 million $6.48 6.00
Foresight Energy $875.83 million 0.37 -$178.78 million ($1.79) -2.35

NACCO Industries has higher revenue, but lower earnings than Foresight Energy. Foresight Energy 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

NACCO Industries has a beta of 0.34, indicating that its stock price is 66% less volatile than the S&P 500. Comparatively, Foresight Energy has a beta of 0.81, indicating that its stock price is 19% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations for NACCO Industries and Foresight Energy, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NACCO Industries 0 0 0 0 N/A
Foresight Energy 0 2 0 0 2.00

Foresight Energy has a consensus target price of $5.25, indicating a potential upside of 25.00%. Given Foresight Energy’s higher possible upside, analysts clearly believe Foresight Energy is more favorable than NACCO Industries.

Institutional and Insider Ownership

49.3% of NACCO Industries shares are held by institutional investors. Comparatively, 11.7% of Foresight Energy shares are held by institutional investors. 30.6% of NACCO Industries shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares NACCO Industries and Foresight Energy’s 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%
Foresight Energy -21.13% -15.37% -2.78%

Dividends

NACCO Industries pays an annual dividend of $2.08 per share and has a dividend yield of 5.4%. Foresight Energy pays an annual dividend of $0.26 per share and has a dividend yield of 6.2%. NACCO Industries pays out 32.1% of its earnings in the form of a dividend. Foresight Energy pays out -14.5% 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 increased its dividend for 3 consecutive years. Foresight Energy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

NACCO Industries beats Foresight Energy on 8 of the 14 factors compared between the two stocks.

About NACCO Industries

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).

About Foresight Energy

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).

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