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Trade-Ideas LLC identified
) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Arch Coal as such a stock due to the following factors:
- ACI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $18.0 million.
- ACI has traded 1.8 million shares today.
- ACI is up 3.4% today.
- ACI was down 8.7% yesterday.
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More details on ACI:
Arch Coal, Inc. produces and sells thermal and metallurgical coal from surface and underground mines located in the United States. The stock currently has a dividend yield of 0.4%. Currently there are 3 analysts that rate Arch Coal a buy, 4 analysts rate it a sell, and 8 rate it a hold.
The average volume for Arch Coal has been 8.9 million shares per day over the past 30 days. Arch Coal has a market cap of $539.2 million and is part of the basic materials sector and metals & mining industry. The stock has a beta of 1.67 and a short float of 21.8% with 6.02 days to cover. Shares are down 47.9% year-to-date as of the close of trading on Tuesday.
rates Arch Coal as a
. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins, weak operating cash flow, generally disappointing historical performance in the stock itself and generally high debt management risk.
Highlights from the ratings report include:
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ARCH COAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for ARCH COAL INC is currently extremely low, coming in at 12.81%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -13.09% is significantly below that of the industry average.
- Net operating cash flow has decreased to $80.34 million or 40.29% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- ACI'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 40.19%, 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 is very high at 2.67 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Regardless of the company's weak debt-to-equity ratio, ACI has managed to keep a strong quick ratio of 2.36, which demonstrates the ability to cover short-term cash needs.
- You can view the full Arch Coal Ratings Report.