NEW YORK (TheStreet) -- The 2010 outlook for U.S. based coal producers James River Coal (JRCC) and Walter Energy (WLT) has improved to a positive undertone over other U.S. based coal producers, lifted by factors such as robust company outlook, comparison multiples and recent stock performance.
James River Coal mines, processes and sells bituminous, steam and industrial-grade coal through six operating subsidiaries located throughout eastern Kentucky and in southern Indiana. Walter Energy is a producer and exporter of metallurgical coal for the world steel industry and also produces steam coal, metallurgical coke and other related products.
Currently, James River and Walter Energy have attractive EV to EBITDA ratios of 3.19, and 4.59 respectively over Peabody Energy's (BTU) 6.42, Consol Energy's (CNX) 4.66, and Alpha Natural Resources' (ANR), 4.64.
James River CoalAs on March 31, 2010, the company has $153.1 million of cash accounting for 21.9% of the total assets, the percentage among the highest in the metals and mining sector. Essentially, this substantial liquidity balance will likely drive growth opportunities for the company. James River leads major coal producers with a return-on-equity of 43.2% for the past 12 months, in comparison to Consol Energy's 33.2%, Walter Energy's 30.8, and Peabody's 13.1%. Commenting on the first quarter results, Chairman and CEO Peter Socha said "With regard to the coal markets, we are beginning to see clear signs of a recovery from recession levels. We will continue to be patient with our contracting strategy. We believe that James River Coal Company is well positioned for a sustained period of profitability." Capitalizing on the current market environment, the company is expected to report earnings of $2.81 per share during 2010, in comparison to the earnings of $1.85 per share for 2009. Currently, the stock has seven buy, three hold and no sell ratings, according to TheStreet's Analyst ratings guide. Walter Energy The company reported a strong first quarter as the recovery in both the domestic and international steel industries was the positive catalyst that increased the demand for coking coal. The company has settled coking coal contracts totaling 1.7 million tons with prices at around $235 a ton for the six-month period beginning April 1. "Looking forward, Walter Energy expects to generate increased earnings for the second quarter following our recent coking coal settlements," said the company's interim CEO Joe Leonard on April 28.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV