Today's Perilous Reversal Stock: Alpha Natural Resources (ANR)

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 Alpha Natural Resources ( ANR) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Alpha Natural Resources as such a stock due to the following factors:

  • ANR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $30.7 million.
  • ANR has traded 182,284 shares today.
  • ANR is down 3.4% today.
  • ANR was up 6.7% yesterday.

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More details on ANR:

Alpha Natural Resources, Inc., together with its subsidiaries, is engaged in extracting, processing, and marketing thermal and metallurgical coal in Virginia, West Virginia, Kentucky, Pennsylvania, and Wyoming. Currently there are 2 analysts that rate Alpha Natural Resources a buy, 3 analysts rate it a sell, and 11 rate it a hold.

The average volume for Alpha Natural Resources has been 7.7 million shares per day over the past 30 days. Alpha Natural has a market cap of $659.9 million and is part of the basic materials sector and metals & mining industry. The stock has a beta of 2.53 and a short float of 29% with 5.32 days to cover. Shares are down 62.2% 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 Alpha Natural Resources as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, poor profit margins 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 176.1% when compared to the same quarter one year ago, falling from -$185.68 million to -$512.63 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.
  • Net operating cash flow has significantly decreased to -$217.05 million or 10445.47% 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 gross profit margin for ALPHA NATURAL RESOURCES INC is currently extremely low, coming in at 11.12%. Regardless of ANR's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, ANR's net profit margin of -48.63% significantly underperformed when compared to the industry average.
  • The debt-to-equity ratio of 1.09 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, ANR has managed to keep a strong quick ratio of 1.64, which demonstrates the ability to cover short-term cash needs.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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