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Walter Energy Inc Stock Downgraded (WLT)

NEW YORK ( TheStreet) -- Walter Energy (NYSE: WLT) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and generally poor debt management.

Highlights from the ratings report include:

  • WLT's very impressive revenue growth greatly exceeded the industry average of 1.3%. Since the same quarter one year prior, revenues leaped by 54.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, WALTER ENERGY INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • The gross profit margin for WALTER ENERGY INC is currently lower than what is desirable, coming in at 29.60%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 6.40% significantly trails the industry average.
  • Net operating cash flow has significantly decreased to $70.85 million or 52.29% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, WALTER ENERGY INC has marginally lower results.

Walter Energy, Inc. produces and exports metallurgical coal for the steel industry primarily in the United States. The company also produces thermal and industrial coal, anthracite, metallurgical coke, coal bed methane gas, and other related products. The company has a P/E ratio of 10.5, equal to the average metals & mining industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Walter Energy has a market cap of $3.21 billion and is part of the basic materials sector and metals & mining industry. Shares are down 18.8% year to date as of the close of trading on Thursday.

You can view the full Walter Energy Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

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