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 Walter Energy ( WLT) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Walter Energy as such a stock due to the following factors:
- WLT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $31.1 million.
- WLT has traded 574,341 shares today.
- WLT is down 3.1% today.
- WLT was up 5.1% yesterday.
EXCLUSIVE OFFER: Get the inside scoop on opportunities in WLT with the Ticky from Trade-Ideas. See the FREE profile for WLT NOW at Trade-Ideas More details on WLT: Walter Energy, Inc. produces and exports metallurgical coal for the steel industry. The company operates through U.S. Operations, and Canadian and U.K. Operations segments. The stock currently has a dividend yield of 0.6%. Currently there are 2 analysts that rate Walter Energy a buy, 4 analysts rate it a sell, and 7 rate it a hold. The average volume for Walter Energy has been 6.5 million shares per day over the past 30 days. Walter Energy has a market cap of $439.7 million and is part of the basic materials sector and metals & mining industry. The stock has a beta of 2.37 and a short float of 57.3% with 7.79 days to cover. Shares are down 57.8% year-to-date as of the close of trading on Monday. STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more. TheStreetRatings.com Analysis: TheStreet Quant Ratings rates Walter Energy as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, poor profit margins, generally disappointing historical performance in the stock itself 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 Metals & Mining industry. The net income has significantly decreased by 86.4% when compared to the same quarter one year ago, falling from -$49.44 million to -$92.18 million.
- The gross profit margin for WALTER ENERGY INC is currently extremely low, coming in at 12.11%. Regardless of WLT's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, WLT's net profit margin of -22.27% significantly underperformed when compared to the industry average.
- The debt-to-equity ratio is very high at 4.38 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, WLT's quick ratio is somewhat strong at 1.29, demonstrating the ability to handle short-term liquidity needs.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 66.05%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 86.07% compared to the year-earlier 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 company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Metals & Mining industry and the overall market, WALTER ENERGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full Walter Energy Ratings Report.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.