NEW YORK (TheStreet) -- Coal mining is still a hazardous job, and investors in coal-related stocks like Joy Global (JOY) , a manufacturer and servicer of coal mining equipment, have put themselves in harm's way financially by betting this declining industry will ever rebound.
Although Joy Global remains profitable, both revenue and profits at the Milwaukee-based company are heading in the wrong direction, making an already-gloomy prospect even less investment-worthy.
Joy Global shares, down more than 16% this year, are now in bearish territory. The trend began four years ago, after the stock peaked at $103.44 in March 2011. As of midday Thursday, when it was trading at $39.24 (down more than 6% on the day), investors had seen their positions plummet more than 60%.
All told, Joy Global has been a losing bet for -- at least -- five years, losing almost 30%. The only winner in the stock have been the short sellers. With Thursday's fiscal first-quarter 2015 revenue and earnings results falling short of Wall Street estimates, short sellers will continue to pile on. And the company's comments suggests short sellers will be right.
"Our first quarter results highlight the continued challenges we face in our end markets as we navigate the extended trough of this cycle," said CEO Ted Doheny in a statement. "Key commodity prices took another step-down this quarter which has created additional challenges for our customers and slowed our incoming order rates," he added.
Because of plummeting global demand, total U.S. coal exports declined 17% last year to an estimated 97 million short tons, according to the Energy Information Administration. And growing output from other coal-exporting countries will continue to push prices lower and put pressure on the domestic industry, the EIA said. The EIA projects coal exports will fall 15% this year and another 15% in 2016.
With the supply-and-demand equation out of balance, Joy Global, as well as coal-related companiesCliffs Natural Resources (CLV) and Console Energy(CNX) - Get Report are stuck operating in an industry in decay, and that's unlikely to change any time soon.
Joy Global will continue to suffer from weak bookings, which fell to $700 million in the just-ended quarter, down 19% from a year earlier. Earnings per share and revenue fell 50% and 16%, respectively, from a year ago.
To sum up, there is no light at the end of this tunnel. The company's cost-cutting plans may slow the earnings decline, but it will only be a temporary and limited reprieve. Absent the ability to invest in growth opportunities, as evidenced by the 72% decline in operating cash, this stock is headed further downward and investors would be better served moving on to safer investments.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.