Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.
Trade-Ideas LLC identified
) as a "perilous reversal" (up big yesterday but down 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 $20.0 million.
- ACI has traded 2.0 million shares today.
- ACI is down 3.3% today.
- ACI was up 6.6% 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 0.3%. 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 5.6 million shares per day over the past 30 days. Arch Coal has a market cap of $607.1 million and is part of the basic materials sector and metals & mining industry. The stock has a beta of 1.94 and a short float of 15% with 5.62 days to cover. Shares are down 31.5% 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 unimpressive growth in net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally high debt management risk.
Highlights from the ratings report include:
- 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 77.2% when compared to the same quarter one year ago, falling from -$70.05 million to -$124.14 million.
- 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 6.75%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -16.86% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$40.28 million or 193.03% 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 debt-to-equity ratio is very high at 2.42 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 2.68, which shows the ability to cover short-term cash needs.
- You can view the full Arch Coal Ratings Report.