Critical Review: Hallador Energy (NASDAQ:HNRG) versus Pinnacle West Capital (NYSE:PNW)

Hallador Energy (NASDAQ:HNRG) and Pinnacle West Capital (NYSE:PNW) are both oils/energy companies, but which is the better stock? We will contrast the two companies based on the strength of their analyst recommendations, profitability, institutional ownership, risk, dividends, valuation and earnings.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Hallador Energy and Pinnacle West Capital, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hallador Energy	0	0	2	0	3.00
Pinnacle West Capital	0	7	6	0	2.46

Hallador Energy currently has a consensus price target of $15.00, suggesting a potential upside of 27.77%. Pinnacle West Capital has a consensus price target of $84.65, suggesting a potential upside of 0.48%. Given Hallador Energy’s stronger consensus rating and higher probable upside, analysts plainly believe Hallador Energy is more favorable than Pinnacle West Capital.

Volatility & Risk

Hallador Energy has a beta of 0.71, indicating that its stock price is 29% less volatile than the S&P 500. Comparatively, Pinnacle West Capital has a beta of 0.54, indicating that its stock price is 46% less volatile than the S&P 500.

Institutional and Insider Ownership

61.4% of Hallador Energy shares are held by institutional investors. Comparatively, 91.5% of Pinnacle West Capital shares are held by institutional investors. 32.3% of Hallador Energy shares are held by insiders. Comparatively, 0.2% of Pinnacle West Capital shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Hallador Energy and Pinnacle West Capital”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hallador Energy	$429.36 million	1.17	$44.79 million	($0.55)	-21.35
Pinnacle West Capital	$5.02 billion	1.91	$501.56 million	$5.28	15.96

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

Profitability

This table compares Hallador Energy and Pinnacle West Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hallador Energy	-4.85%	-6.71%	-3.39%
Pinnacle West Capital	12.26%	9.60%	2.43%

Dividends

Hallador Energy pays an annual dividend of $0.16 per share and has a dividend yield of 1.4%. Pinnacle West Capital pays an annual dividend of $3.58 per share and has a dividend yield of 4.2%. Hallador Energy pays out -29.1% of its earnings in the form of a dividend. Pinnacle West Capital pays out 67.8% 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. Pinnacle West Capital has increased its dividend for 13 consecutive years. Pinnacle West Capital is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Pinnacle West Capital beats Hallador Energy on 12 of the 17 factors compared between the two stocks.

About Hallador Energy

Hallador Energy Company, through its subsidiaries, engages in the production of steam coal in the State of Indiana for the electric power generation industry. The company owns the Oaktown Mine 1 and Oaktown Mine 2 underground mines in Oaktown; Freelandville Center Pit surface mine in Freelandville; and Prosperity Surface mine in Petersburg, Indiana. It is also involved in gas exploration activities in Indiana; and operation of logistics transport facility. Hallador Energy Company was founded in 1949 and is headquartered in Terre Haute, Indiana.

About Pinnacle West Capital

Pinnacle West Capital Corporation, through its subsidiary, provides retail and wholesale electric services primarily in the state of Arizona. The company engages in the generation, transmission, and distribution of electricity using coal, nuclear, gas, oil, and solar generating facilities. Its transmission facilities include overhead lines and underground lines; and distribution facilities consist of overhead lines and underground primary cables. The company also owns and maintains transmission and distribution substations; and owns energy storage facilities. Pinnacle West Capital Corporation was incorporated in 1985 and is headquartered in Phoenix, Arizona.