November 19, 2023 - Warrior Met Coal (NYSE:HCC – Get Free Report) and Arch Resources (NYSE:ARCH – Get Free Report) are both mid-cap oils/energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, earnings, profitability, dividends, risk, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a summary of current recommendations and price targets for Warrior Met Coal and Arch Resources, as provided by MarketBeat.com.

Warrior Met Coal currently has a consensus target price of $53.75, suggesting a potential downside of 0.09%. Arch Resources has a consensus target price of $181.00, suggesting a potential upside of 13.58%. Given Arch Resources’ stronger consensus rating and higher possible upside, analysts plainly believe Arch Resources is more favorable than Warrior Met Coal.

Earnings & Valuation

This table compares Warrior Met Coal and Arch Resources’ gross revenue, earnings per share and valuation.

Arch Resources has higher revenue and earnings than Warrior Met Coal. Arch Resources is trading at a lower price-to-earnings ratio than Warrior Met Coal, indicating that it is currently the more affordable of the two stocks.

Dividends

Warrior Met Coal pays an annual dividend of $0.28 per share and has a dividend yield of 0.5%. Arch Resources pays an annual dividend of $1.00 per share and has a dividend yield of 0.6%. Warrior Met Coal pays out 3.2% of its earnings in the form of a dividend. Arch Resources pays out 2.4% 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. Warrior Met Coal has increased its dividend for 2 consecutive years. Arch Resources is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

Warrior Met Coal has a beta of 1.07, indicating that its stock price is 7% more volatile than the S&P 500. Comparatively, Arch Resources has a beta of 0.66, indicating that its stock price is 34% less volatile than the S&P 500.

Institutional & Insider Ownership

93.9% of Warrior Met Coal shares are held by institutional investors. Comparatively, 85.0% of Arch Resources shares are held by institutional investors. 1.0% of Warrior Met Coal shares are held by company insiders. Comparatively, 5.4% of Arch Resources shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Warrior Met Coal and Arch Resources’ net margins, return on equity and return on assets.

Summary

Arch Resources beats Warrior Met Coal on 11 of the 17 factors compared between the two stocks.

About Warrior Met Coal

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Warrior Met Coal, Inc. produces and exports non-thermal metallurgical coal for the steel industry. It operates two underground mines located in Alabama. The company sells its metallurgical coal to a customer base of blast furnace steel producers located primarily in Europe, South America, and Asia. It also sells natural gas, which is extracted as a byproduct from coal production. Warrior Met Coal, Inc. was incorporated in 2015 and is headquartered in Brookwood, Alabama.

About Arch Resources

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Arch Resources, Inc. produces and sells metallurgical products. As of December 31, 2022, the company operated seven active mines. It also owned or controlled primarily through long-term leases approximately 28,292 acres of coal land in Ohio; 952 acres of coal land in Maryland; 10,095 acres of coal land in Virginia; 306,263 acres of coal land in West Virginia; 81,450 acres of coal land in Wyoming; 234,087 acres of coal land in Illinois; 33,047 acres of coal land in Kentucky; 362 acres of coal land in Montana; 248 acres of coal land in Pennsylvania; and 19,018 acres of coal land in Colorado, as well as smaller parcels of property in Alabama, Indiana, Washington, Arkansas, California, Utah, and Texas. The company sells its products to utility, industrial, and steel producers in the United States and internationally. Arch Resources, Inc. was incorporated in 1969 and is headquartered in St. Louis, Missouri.