NEW YORK ( TheStreet) -- Alpha Natural Resources (NYSE: ANR) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself. 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 6865.7% when compared to the same quarter one year ago, falling from $10.84 million to -$733.33 million.
- 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.
- The gross profit margin for ALPHA NATURAL RESOURCES INC is rather low; currently it is at 17.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -35.40% is significantly below that of the industry average.
- Net operating cash flow has decreased to $149.41 million or 18.15% 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.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 73.89%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 3811.11% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
-- Written by a member of TheStreet Ratings Staff