Critical Survey: China Coal Energy (OTCMKTS:CCOZY) versus Peabody Energy (NYSE:BTU)

China Coal Energy (OTCMKTS:CCOZY) and Peabody Energy (NYSE:BTU) are both energy companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, valuation, profitability, institutional ownership, analyst recommendations, dividends and risk.

Valuation and Earnings

This table compares China Coal Energy and Peabody Energy”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
China Coal Energy	$27.30 billion	0.59	$2.85 billion	$3.98	6.16
Peabody Energy	$4.24 billion	0.46	$370.90 million	$2.68	5.97

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

Profitability

This table compares China Coal Energy and Peabody Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
China Coal Energy	N/A	N/A	N/A
Peabody Energy	8.73%	10.05%	6.34%

Risk & Volatility

China Coal Energy has a beta of -0.2, meaning that its share price is 120% less volatile than the S&P 500. Comparatively, Peabody Energy has a beta of 0.52, meaning that its share price is 48% less volatile than the S&P 500.

Dividends

China Coal Energy pays an annual dividend of $1.15 per share and has a dividend yield of 4.7%. Peabody Energy pays an annual dividend of $0.30 per share and has a dividend yield of 1.9%. China Coal Energy pays out 28.9% of its earnings in the form of a dividend. Peabody Energy pays out 11.2% 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. Peabody Energy has raised its dividend for 1 consecutive years.

Analyst Recommendations

This is a summary of current ratings for China Coal Energy and Peabody Energy, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
China Coal Energy	1	0	0	0	1.00
Peabody Energy	0	1	4	0	2.80

Peabody Energy has a consensus target price of $21.60, indicating a potential upside of 34.93%. Given Peabody Energy’s stronger consensus rating and higher possible upside, analysts plainly believe Peabody Energy is more favorable than China Coal Energy.

Institutional & Insider Ownership

87.4% of Peabody Energy shares are owned by institutional investors. 0.4% of Peabody Energy shares are owned 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.

Summary

Peabody Energy beats China Coal Energy on 11 of the 17 factors compared between the two stocks.

About China Coal Energy

China Coal Energy Company Limited primarily engages in the coal production and trading and coal chemical businesses in the People's Republic of China and internationally. The company offers polyolefin, methanol, urea, and other coal chemical products. It is also involved in the coal mining equipment manufacturing, pithead power generation, and other activities. The company was founded in 2006 and is based in Beijing, the People's Republic of China. China Coal Energy Company Limited operates as a subsidiary of China National Coal Group Co., Ltd.

About Peabody Energy

Peabody Energy Corporation engages in coal mining business in the United States, Japan, Taiwan, Australia, India, Brazil, Belgium, Chile, France, Indonesia, China, Vietnam, South Korea, Germany, and internationally. The company operates through Seaborne Thermal, Seaborne Metallurgical, Powder River Basin, Other U.S. Thermal, and Corporate and Other segments. It is involved in the mining, preparation, and sale of thermal coal primarily to electric utilities; mining bituminous and sub-bituminous coal deposits; low sulfur and high British thermal unit thermal coal; and mining metallurgical coal, such as hard coking coal, semi-hard coking coal, semi-soft coking coal, and pulverized coal injection coal. The company supplies coal primarily to electricity generators, industrial facilities, and steel manufacturers. It also engages in marketing and brokering of coal from other coal producers; trading of coal and freight-related contracts, as well as provides transportation-related services. The company was founded in 1883 and is headquartered in Saint Louis, Missouri.