NEW YORK (TheStreet) -- Shares of Virginia-based coal company Alpha Natural Resources (ANR) are down 3.33% to $1.60 as natural gas prices fell to nearly a two-year low Monday, increasing competition with coal for electricity generation, the Wall Street Journal reports.
Natural gas for January delivery was down 33.1 cents, or 9.5%, at $3.133 a million British thermal units on the New York Mercantile Exchange. It was the biggest one-day percentage loss since February, and the lowest intraday price since January 2013. As of 1:56 p.m. in New York, it was down 8.26%.
Separately, Alpha Natural Resources' affiliated mining operations in West Virginia announced on Friday they will pay $350,000 for a settlement of three selenium discharge suits brought by four environmental organizations.
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TheStreet Ratings team rates ALPHA NATURAL RESOURCES INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:
"We rate ALPHA NATURAL RESOURCES INC (ANR) a SELL. This is driven by some concerns, 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 disappointing return on equity, weak operating cash flow, poor profit margins, generally disappointing historical performance in the stock itself and generally high debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 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.
- Net operating cash flow has significantly decreased to $17.86 million or 83.92% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The gross profit margin for ALPHA NATURAL RESOURCES INC is currently extremely low, coming in at 6.65%. Regardless of ANR's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, ANR's net profit margin of -17.60% significantly underperformed when compared to the industry average.
- ANR's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 76.06%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
- The debt-to-equity ratio of 1.17 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, ANR's quick ratio is somewhat strong at 1.46, demonstrating the ability to handle short-term liquidity needs.
- You can view the full analysis from the report here: ANR Ratings Report