The Virginia-based supplier and exporter of metallurgical coals for use in the steel-making process is hampered by a debt load and the collapse in global metallurgical coal prices, analysts said.
"The debt load created by the ICG acquisition, coupled with the subsequent collapse in global metallurgical coal prices, leaves Alpha with very little equity value, in our view, unless global metallurgical and/or eastern U.S. thermal coal prices increase significantly," analysts said.
"We expect the core cash burn to increase in 2015, as higher interest expenses and capex bump into lower EBITDA," analysts said, adding, "But, for those investors of the opinion that metallurgical and/or thermal coal prices will recover faster and/or more significantly than our base-case assumption, Alpha represents a highly leveraged (both operationally and financially) investment vehicle."
Shares of Alpha Natural Resources closed up 0.38% to $2.61 yesterday.
Separately, TheStreet Ratings team rates ALPHA NATURAL RESOURCES INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:
"We rate ALPHA NATURAL RESOURCES INC (ANR) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and generally high debt management risk."