Peabody Energy (NYSE:BTU – Get Free Report) and Plains GP (NYSE:PAGP – Get Free Report) are both mid-cap energy companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, institutional ownership, dividends, risk, earnings, analyst recommendations and profitability.
Profitability
This table compares Peabody Energy and Plains GP’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Peabody Energy | -4.56% | -5.22% | -3.22% |
| Plains GP | 0.21% | 0.70% | 0.36% |
Insider & Institutional Ownership
87.4% of Peabody Energy shares are owned by institutional investors. Comparatively, 88.3% of Plains GP shares are owned by institutional investors. 0.5% of Peabody Energy shares are owned by insiders. Comparatively, 6.9% of Plains GP shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Analyst Ratings
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Peabody Energy | 2 | 2 | 2 | 0 | 2.00 |
| Plains GP | 2 | 6 | 4 | 1 | 2.31 |
Peabody Energy currently has a consensus target price of $33.88, indicating a potential upside of 32.96%. Plains GP has a consensus target price of $24.91, indicating a potential downside of 6.29%. Given Peabody Energy’s higher probable upside, analysts clearly believe Peabody Energy is more favorable than Plains GP.
Risk and Volatility
Peabody Energy has a beta of 0.34, meaning that its stock price is 66% less volatile than the S&P 500. Comparatively, Plains GP has a beta of 0.48, meaning that its stock price is 52% less volatile than the S&P 500.
Dividends
Peabody Energy pays an annual dividend of $0.30 per share and has a dividend yield of 1.2%. Plains GP pays an annual dividend of $1.67 per share and has a dividend yield of 6.3%. Peabody Energy pays out -20.0% of its earnings in the form of a dividend. Plains GP pays out 59.9% 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.
Earnings & Valuation
This table compares Peabody Energy and Plains GP”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Peabody Energy | $3.86 billion | 0.80 | -$52.90 million | ($1.50) | -16.98 |
| Plains GP | $52.30 billion | 0.10 | $103.00 million | $2.79 | 9.53 |
Plains GP has higher revenue and earnings than Peabody Energy. Peabody Energy is trading at a lower price-to-earnings ratio than Plains GP, indicating that it is currently the more affordable of the two stocks.
Summary
Plains GP beats Peabody Energy on 14 of the 18 factors compared between the two stocks.
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.
About Plains GP
Plains GP Holdings, L.P., through its subsidiary, Plains All American Pipeline, L.P., owns and operates midstream infrastructure systems in the United States and Canada. It operates in two segments, Crude Oil and Natural Gas Liquids (NGLs). The company engages in the gathering and transporting crude oil and NGLs using pipelines, gathering systems, and trucks. It engages in the loading and unloading services at terminals; NGL fractionation and isomerization services; and natural gas and condensate processing services. The company offers logistics services to producers, refiners, and other customers. PAA GP Holdings LLC operates as a general partner of the company. Plains GP Holdings, L.P. was incorporated in 2013 and is headquartered in Houston, Texas.
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