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TheStreet Open House

What to Expect From Alpha Natural Resources (ANR) Earnings

NEW YORK (TheStreet) -- Coal miner Alpha Natural Resources (ANR) is due to report fourth-quarter and full-year earnings on Wednesday, Feb. 12.

In its third quarter, the Virginia-based company guided full-year shipments of 86 to 91 million tons, including 20 to 21 tons of Eastern metallurgical coal, 28 to 30 million tons of Eastern steam coal, and 38 to 40 million tons of Western PRB coal. By Oct. 18 last year, 96% of the midpoint of anticipated 2013 metallurgical coal shipments had been achieved.

Guidance for depreciation, depletion and amortization (DD&A) is expected between $825 million and $900 million, down from previous guidance of $875 million to $950 million. Capital expenditures for the December-ended year are expected in the range of $260 million to $290 million.

Analysts polled by Thomson Reuters anticipate a fourth-quarter net loss of 62 cents a share on $1.17 billion in revenue. For the full year, a net loss of $2.28 a share is forecast with sales of $5.04 billion.

By late afternoon on Monday, shares had tumbled 4.3% to $5.07, with 10.6 million shares changing hands. Year to date, the stock is down 28.9%.

Must Read: Coal Producers Fizzle on Poor Manufacturing Data

TheStreet Ratings team rates ALPHA NATURAL RESOURCES INC as a Sell with a ratings score of D. The team has this to say about their recommendation:

"We rate ALPHA NATURAL RESOURCES INC (ANR) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 893.0% when compared to the same quarter one year ago, falling from -$46.15 million to -$458.24 million.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 40.60%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 885.71% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • Net operating cash flow has decreased to $111.08 million or 34.77% when compared to the same quarter last year. Despite a decrease in cash flow ALPHA NATURAL RESOURCES INC is still fairing well by exceeding its industry average cash flow growth rate of -48.26%.
  • ALPHA NATURAL RESOURCES INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ALPHA NATURAL RESOURCES INC reported poor results of -$11.06 versus -$3.25 in the prior year. This year, the market expects an improvement in earnings (-$2.29 versus -$11.06).
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ALPHA NATURAL RESOURCES INC's return on equity significantly trails that of both the industry average and the S&P 500.

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