NEW YORK ( TheStreet) -- The 2010 outlook for U.S. based coal producers James River Coal (JRCC - Get Report) and Walter Energy (WLT - Get Report) 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 - Get Report) 6.42, Consol Energy's (CNX - Get Report) 4.66, and Alpha Natural Resources' (ANR - Get Report), 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.