Financial Analysis: Alliance Resource Partners (NASDAQ:ARLP) and BP (NYSE:BP)

BP (NYSE:BP) and Alliance Resource Partners (NASDAQ:ARLP) are both energy companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, risk, earnings, analyst recommendations, dividends, institutional ownership and profitability.

Dividends

BP pays an annual dividend of $2.05 per share and has a dividend yield of 4.5%. Alliance Resource Partners pays an annual dividend of $2.40 per share and has a dividend yield of 9.5%. BP pays out 60.3% of its earnings in the form of a dividend. Alliance Resource Partners pays out 100.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Valuation and Earnings

This table compares BP and Alliance Resource Partners”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
BP	$237.14 billion	0.51	$55.00 million	$3.40	13.49
Alliance Resource Partners	$2.21 billion	1.47	$311.16 million	$2.40	10.53

Alliance Resource Partners has lower revenue, but higher earnings than BP. Alliance Resource Partners is trading at a lower price-to-earnings ratio than BP, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current ratings and target prices for BP and Alliance Resource Partners, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
BP	2	8	14	1	2.56
Alliance Resource Partners	0	1	2	0	2.67

BP presently has a consensus price target of $49.90, suggesting a potential upside of 8.83%. Given BP’s higher possible upside, analysts clearly believe BP is more favorable than Alliance Resource Partners.

Insider & Institutional Ownership

11.0% of BP shares are held by institutional investors. Comparatively, 18.1% of Alliance Resource Partners shares are held by institutional investors. 1.0% of BP shares are held by company insiders. Comparatively, 16.8% of Alliance Resource Partners shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares BP and Alliance Resource Partners’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
BP	3.74%	24.67%	6.42%
Alliance Resource Partners	14.09%	19.88%	12.39%

Volatility & Risk

BP has a beta of 0.16, indicating that its stock price is 84% less volatile than the S&P 500. Comparatively, Alliance Resource Partners has a beta of 0.3, indicating that its stock price is 70% less volatile than the S&P 500.

Summary

Alliance Resource Partners beats BP on 9 of the 17 factors compared between the two stocks.

About BP

BP p.l.c. is a global integrated energy company headquartered in London, United Kingdom. Its operations span the exploration, development and production of oil and natural gas, as well as the processing, refining, transportation and marketing of energy products. Through its businesses, BP supplies fuels for road transportation, aviation and marine use, along with lubricants marketed under the Castrol brand. The company also operates retail fuel and convenience locations and provides energy products and services to commercial and industrial customers.

About Alliance Resource Partners

Alliance Resource Partners, L.P. is a diversified natural resource company best known for producing and marketing coal. Its coal is sold primarily to electric utilities for power generation, along with customers in other industrial markets. The partnership operates coal mines in the Illinois Basin and Appalachia, serving customers in the United States and international markets. Its activities also include oil and gas royalty interests and other mineral interests, which provide exposure to resources beyond coal.