SandRidge Energy (NYSE:SD – Get Free Report) and Peabody Energy (NYSE:BTU – Get Free Report) are both energy companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, valuation, analyst recommendations, profitability, earnings, dividends and institutional ownership.
Dividends
SandRidge Energy pays an annual dividend of $0.52 per share and has a dividend yield of 3.6%. Peabody Energy pays an annual dividend of $0.30 per share and has a dividend yield of 1.2%. SandRidge Energy pays out 23.2% of its earnings in the form of a dividend. Peabody Energy pays out -20.0% 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. SandRidge Energy has increased its dividend for 2 consecutive years and Peabody Energy has increased its dividend for 1 consecutive years. SandRidge Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Volatility & Risk
SandRidge Energy has a beta of 0.71, suggesting that its stock price is 29% less volatile than the S&P 500. Comparatively, Peabody Energy has a beta of 0.33, suggesting that its stock price is 67% less volatile than the S&P 500.
Analyst Ratings
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| SandRidge Energy | 0 | 3 | 0 | 0 | 2.00 |
| Peabody Energy | 1 | 3 | 2 | 0 | 2.17 |
Peabody Energy has a consensus price target of $33.88, suggesting a potential upside of 34.46%. Given Peabody Energy’s stronger consensus rating and higher possible upside, analysts plainly believe Peabody Energy is more favorable than SandRidge Energy.
Institutional & Insider Ownership
61.8% of SandRidge Energy shares are held by institutional investors. Comparatively, 87.4% of Peabody Energy shares are held by institutional investors. 1.6% of SandRidge Energy shares are held by insiders. Comparatively, 0.5% of Peabody Energy shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
Profitability
This table compares SandRidge Energy and Peabody Energy’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| SandRidge Energy | 46.06% | 13.62% | 10.93% |
| Peabody Energy | -4.56% | -5.22% | -3.22% |
Valuation and Earnings
This table compares SandRidge Energy and Peabody Energy”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| SandRidge Energy | $156.36 million | 3.40 | $70.20 million | $2.24 | 6.41 |
| Peabody Energy | $3.86 billion | 0.79 | -$52.90 million | ($1.50) | -16.80 |
SandRidge Energy has higher earnings, but lower revenue than Peabody Energy. Peabody Energy is trading at a lower price-to-earnings ratio than SandRidge Energy, indicating that it is currently the more affordable of the two stocks.
Summary
SandRidge Energy beats Peabody Energy on 10 of the 16 factors compared between the two stocks.
About SandRidge Energy
SandRidge Energy, Inc. engages in the acquisition, development, and production of oil, natural gas, and natural gas liquids in the United States Mid-Continent. The company was incorporated in 2006 and is headquartered in Oklahoma City, Oklahoma.
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.
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