SunCoke Energy Partners (SXCP) versus Commercial Metals (CMC) Financial Analysis

SunCoke Energy Partners (NYSE: SXCP) and Commercial Metals (NYSE:CMC) are both basic materials companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, institutional ownership, dividends, analyst recommendations, profitability, valuation and risk.

Analyst Ratings

This is a summary of recent recommendations and price targets for SunCoke Energy Partners and Commercial Metals, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SunCoke Energy Partners 0 0 1 0 3.00
Commercial Metals 2 0 5 0 2.43

Commercial Metals has a consensus price target of $21.57, suggesting a potential downside of 13.37%. Given Commercial Metals’ higher possible upside, analysts clearly believe Commercial Metals is more favorable than SunCoke Energy Partners.

Institutional and Insider Ownership

13.3% of SunCoke Energy Partners shares are held by institutional investors. Comparatively, 88.6% of Commercial Metals shares are held by institutional investors. 1.5% of Commercial Metals shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Risk and Volatility

SunCoke Energy Partners has a beta of 1.28, meaning that its share price is 28% more volatile than the S&P 500. Comparatively, Commercial Metals has a beta of 1.26, meaning that its share price is 26% more volatile than the S&P 500.

Earnings and Valuation

This table compares SunCoke Energy Partners and Commercial Metals’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SunCoke Energy Partners $779.70 million 1.04 $119.10 million ($1.85) -9.51
Commercial Metals $4.57 billion 0.64 $46.33 million $0.66 37.73

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

Profitability

This table compares SunCoke Energy Partners and Commercial Metals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SunCoke Energy Partners -9.04% 15.35% 5.55%
Commercial Metals 1.53% 8.08% 3.69%

Dividends

SunCoke Energy Partners pays an annual dividend of $2.38 per share and has a dividend yield of 13.5%. Commercial Metals pays an annual dividend of $0.48 per share and has a dividend yield of 1.9%. SunCoke Energy Partners pays out -128.6% of its earnings in the form of a dividend. Commercial Metals pays out 72.7% 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. SunCoke Energy Partners has increased its dividend for 2 consecutive years and Commercial Metals has increased its dividend for 2 consecutive years. SunCoke Energy Partners is clearly the better dividend stock, given its higher yield and lower payout ratio.

About SunCoke Energy Partners

SunCoke Energy Partners, L.P. is engaged in the production of coke used in the blast furnace production of steel. As of December 31, 2016, the Company owned a 98% interest in Haverhill Coke Company LLC (Haverhill), Middletown Coke Company, LLC (Middletown), and Gateway Energy and Coke Company, LLC (Granite City). The Company’s segments include Domestic Coke, which consists of the Haverhill, Middletown and Granite City cokemaking and heat recovery operations located in Franklin Furnace, Ohio; Middletown, Ohio, and Granite City, Illinois, respectively, and Coal Logistics, which consists of the Company’s Convent Marine Terminal, Kanawha River Terminals, LLC and SunCoke Lake Terminal, LLC (Lake Terminal) coal handling and/or mixing service operations in Convent, Louisiana; Ceredo and Belle, West Virginia, and East Chicago, Indiana, respectively. It also provides coal handling and/or mixing services at its Coal Logistics terminals to steel, coke, electric utility and coal mining customers.

About Commercial Metals

Commercial Metals Company, together with its subsidiaries, manufactures, recycles and markets steel and metal products, related materials and services through a network. The Company’s Americas Recycling segment processes scrap metals for use as a raw material by manufacturers of new metal products. The Americas Mills segment consists of steel mills, commonly referred to as minimills that produce reinforcing bar (rebar), angles, flats and rounds. Its Americas Fabrication segment consists of its steel fabrication facilities that bend, weld, cut and fabricate steel, primarily rebar. Its International Mill segment consists of its mill, recycling and fabrication operations located in Poland. Its International Marketing and Distribution segment includes international operations for the sales, distribution and processing of primary and secondary metals, fabricated metals, semi-finished, long and flat steel products, and other industrial products.

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