Comparing Alpha Appalachia (MEE) & Alliance Holdings GP (AHGP)

Alpha Appalachia (NYSE: MEE) and Alliance Holdings GP (NASDAQ:AHGP) are both energy companies, but which is the superior stock? We will compare the two businesses based on the strength of their risk, earnings, profitability, institutional ownership, dividends, analyst recommendations and valuation.

Profitability

This table compares Alpha Appalachia and Alliance Holdings GP’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Alpha Appalachia N/A N/A N/A
Alliance Holdings GP 10.76% 17.78% 9.24%

Earnings and Valuation

This table compares Alpha Appalachia and Alliance Holdings GP’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Alpha Appalachia N/A N/A N/A ($2.05) N/A
Alliance Holdings GP $1.93 billion 0.77 $185.93 million $3.30 7.56

Alliance Holdings GP has higher revenue and earnings than Alpha Appalachia. Alpha Appalachia is trading at a lower price-to-earnings ratio than Alliance Holdings GP, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent recommendations for Alpha Appalachia and Alliance Holdings GP, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alpha Appalachia 0 0 0 0 N/A
Alliance Holdings GP 0 1 0 0 2.00

Alliance Holdings GP has a consensus price target of $31.00, suggesting a potential upside of 24.25%.

Institutional & Insider Ownership

20.9% of Alliance Holdings GP shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Alliance Holdings GP pays an annual dividend of $2.94 per share and has a dividend yield of 11.8%. Alpha Appalachia does not pay a dividend. Alliance Holdings GP pays out 89.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Alliance Holdings GP beats Alpha Appalachia on 7 of the 8 factors compared between the two stocks.

About Alpha Appalachia

Massey Energy Company (Massey) is a coal producer in the United States. The Company produces, processes and sells bituminous coal of various steam and metallurgical grades, primarily of a low sulfur content, through its 25 processing and shipping centers (Resource Groups), many of which receive coal from multiple mines. At January 31, 2011, the Company operated 84 mines, including 66 underground mines (one of which employs both room and pillar and longwall mining) and 18 surface mines (with 12 highwall miners in operation) in West Virginia, Kentucky and Virginia. On April 19, 2010, the Company completed the acquisition of Cumberland Resources Corporation and certain affiliated entities (Cumberland). The Cumberland operations include primarily underground coal mines in Southwestern Virginia and Eastern Kentucky. The Company owns a majority interest in Coalsolv, LLC (Coalsolv).

About Alliance Holdings GP

Alliance Holdings GP, L.P. (AHGP) is a limited partnership company. The Company owns directly and indirectly the members’ interest in Alliance Resource Management GP, LLC (MGP), the managing general partner of Alliance Resource Partners, L.P. (ARLP). The Company’s segments include Illinois Basin, Appalachia, and Other and Corporate. The Illinois Basin segment consists of mining complexes, including Webster County Coal’s Dotiki mining complex; Gibson County Coal’s mining complex, which includes the Gibson North mine and Gibson South mine; Warrior’s mining complex; River View’s mining complex and the Hamilton mining complex. The Appalachia segment consists of various operating segments, including the Mettiki mining complex, the Tunnel Ridge mining complex and the MC Mining mining complex. The Mettiki mining complex includes Mettiki Coal (WV)’s Mountain View mine and Mettiki Coal’s preparation plant. Other and Corporate segment includes marketing and administrative activities.

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