Alpha Natural Resources (ANR) Stock Soared After Supreme Court EPA Ruling

NEW YORK (TheStreet) -- Shares of Alpha Natural Resources (ANR) closed higher by 8.59% to 34 cents on heavy volume on Monday afternoon, after the Supreme Court ruled that the Obama Administration failed to take into account the cost to companies when deciding to regulate mercury pollution from plants, Reuters reports.

In a 5-4 ruling the court determined that the Environmental Protection Agency must factor in costs when determining if regulation is "appropriate and necessary," Reuters added.

In June of last year a court upheld the EPA regulation. Several industry groups and some states appealed the decision claiming that limiting emission could result in costs of up to $9.6 billion.

By the close of trading on Monday, 9.51 million shares of Alpha Natural Resources had exchanged hands as compared to its average daily volume of 4.98 million shares.

Alpha Natural Resources is a Bristol, VA.-based producer of metallurgical coals for the industrial production of steel and iron.

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 several 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 poor profit margins, weak operating cash flow, 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:

  • The gross profit margin for ALPHA NATURAL RESOURCES INC is currently extremely low, coming in at 0.63%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 8.10% is above that of the industry average.
  • Net operating cash flow has decreased to -$59.78 million or 10.79% when compared to the same quarter last year. Despite a decrease in cash flow ALPHA NATURAL RESOURCES INC is still fairing well by exceeding its industry average cash flow growth rate of -53.17%.
  • ANR'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 90.09%, 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 of 1.09 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, ANR's quick ratio is somewhat strong at 1.27, demonstrating the ability to handle short-term liquidity needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. 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.
  • You can view the full analysis from the report here: ANR Ratings Report

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