NEW YORK (TheStreet) -- Shares of Walter Energy (WLT) plummeted more than 11.5% to $2.45 in afternoon trading Tuesday after BB&T Capital Markets predicted the metallurgical coal producer and exporter would file for bankruptcy in 2015.
The firm issued a research note Tuesday with predictions on the coal sector for 2015, and one of the predictions was Walter Energy would file for bankruptcy next year.
Walter Energy has declined more than 80% so far this year. The stock holds a 52-week high of $17.42 and a 52-week low of $1.47, which it hit in October. The stock had an intraday low of $2.41 and an intraday high of $2.75 as of 1:12 p.m. on Tuesday.
Separately, TheStreet Ratings team rates WALTER ENERGY INC as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate WALTER ENERGY INC (WLT) a SELL. This is driven by a few notable weaknesses, 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, poor profit margins, generally disappointing historical performance in the stock itself and generally high debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 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.
- The gross profit margin for WALTER ENERGY INC is currently extremely low, coming in at 5.39%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -30.01% is significantly below that of the industry average.
- WLT's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 77.00%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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 debt-to-equity ratio is very high at 7.01 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Regardless of the company's weak debt-to-equity ratio, WLT has managed to keep a strong quick ratio of 1.67, which demonstrates the ability to cover short-term cash needs.
- The revenue fell significantly faster than the industry average of 3.0%. Since the same quarter one year prior, revenues fell by 27.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full analysis from the report here: WLT Ratings Report