SunCoke Energy Partners Provides Opportunity for Investors

SunCoke Energy Partners (SXCP, Financial) is engaged in the production of steel. It also provides coal handling and/or mixing services with operations in Ohio, Illinois, Louisiana, West Virginia, east Chicago and Indiana.

The company has been building momentum. Over the previous year its market price has gained an estimated 41%.

The company released positive first-quarter results on April 20.

SunCoke Energy Partners improved its revenues by $1.1 million year over year.

It improved its EBITDA in the first quarter by $3.5 million primarily due to the impact of higher volumes in its Coal Logistics segment, partially offset by unfavorable coal cost recovery and Middletown's return to a normalized run-rate performance in the Domestic Coke segment.

The company has also improved its revenue, cost of goods sold and gross profit over the previous six years.

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• The company’s revenue has increased from $308 million to $780 million over the last six years, an annual average increase of 13.73%.
• The company has improved its cost of goods sold from $308.9 million to $517.2 million over the last six years, an average annual increase of 8.47%.
• The cost of goods sold is an important financial metric because it is directly linked to the profitability of the company through its gross margin.

Companies that have a “moat” can usually maintain or even expand their gross margins.

• Over the last six years, SunCoke more than doubled its gross margin percentage from 14.36% in December 2010 to 33.16% over the previous trailing 12 months. This indicates that the company has "a moat" that gives it a differentiation advantage within its industry.
• The company has increased its gross profit from $51.8 million to $262.4 million over the last six years, an annual average increase of 31.05%.

Insiders are buying

Sun Coal & Coke LLC, 10% owner of SunCoke Energy Partners, purchased 113,641 shares of the company between May 2 and May 8 in five transactions according to the SEC. It now owns 25,434,939 million shares of the company.

Since the purchases, SunCoke's market price has gained an estimated 4.08%.

Additional good signs for SunCoke Energy Partners

• The company has an operating margin of 18.31% indicating that it is expanding its operations.
• The company has a Beneish M-Score of -3.36 indicating that it is not a manipulator of its financial statements.
• The company is paying a dividend yield of 13.72% ranking it higher than 98% of the 105 companies in the global coal industry.
• The company is owned by legendary guru Jim Simons (Trades, Portfolio) who has returned an estimated 30% since 2010 with his Medallion Fund.
• The company is trading below its intrinsic value according to the Peter Lynch chart below.

Disclosure: Author does not own any shares of this company.

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