NEW YORK (TheStreet) -- Shares of SunCoke Energy, Inc. (SXC) are higher by 3.60% to $21.30 after Goldman Sachs (GS) upgraded the independent producer of coke to "conviction buy" from "buy" with a price target of $27.
The firm cited potential catalysts that include buybacks and introduction of a dividend, tuck-in acquisitions and a potential sale of the coal business.
TheStreet Ratings team rates SUNCOKE ENERGY INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate SUNCOKE ENERGY INC (SXC) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its solid stock price performance. At the same time, however, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- SXC, with its decline in revenue, underperformed when compared the industry average of 4.5%. Since the same quarter one year prior, revenues fell by 20.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Compared to its closing price of one year ago, SXC's share price has jumped by 43.88%, exceeding the performance of the broader market during that same time frame. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
- The debt-to-equity ratio of 1.25 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, SXC's quick ratio is somewhat strong at 1.14, demonstrating the ability to handle short-term liquidity needs.
- SUNCOKE ENERGY INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, SUNCOKE ENERGY INC reported lower earnings of $0.36 versus $1.40 in the prior year. For the next year, the market is expecting a contraction of 43.3% in earnings ($0.20 versus $0.36).
- 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 471.4% when compared to the same quarter one year ago, falling from $2.10 million to -$7.80 million.
- You can view the full analysis from the report here: SXC Ratings Report