NEW YORK (TheStreet) – Alpha Natural Resources (ANR) shares had fallen into the red during Friday’s trading session, adding to an overall 7.2% loss over the week. By mid-afternoon, the stock had tumbled 1.6% to $ 6.34.
On Thursday evening, the coal supplier announced a public offering of $ 300 million convertible senior notes due 2020 at an aggregate principal amount of 4.875% and an additional $ 45 million notes as an over-allotment option to underwriters. The company anticipates $ 292 million in capital, or $ 336 million with options exercised, to be raised.
Barclays, Bank of America, Goldman Sachs and Deutsche Bank are fulfilling the roles of joint book-running managers for the offering.
Earlier in the week, the Bristol, Va.-based business rallied after agreeing to sell its 50% stake in shale resources joint venture with Rice Energy for $ 200 million in the latter’s common stock and $ 100 million in cash. The venture partnership has been in operation since 2010, a project which sought to develop Alpha’s Marcellus natural gas properties in Greene Country, Pennsylvania.
“Alpha has committed approximately 7,500 acres and about $ 30 million in cash to Alpha Shale and we believe that this transaction provides Alpha with an excellent return on our investment while also allowing us to retain significant upside,” said Alpha CEO Kevin Crutchfield. “We will continue to evaluate all possibilities for creating value from the balance of our Marcellus position of approximately 10,000 acres.”
Announced before the bell Monday, the asset sale a sparked a rally which saw Alpha’s shares climb 14.6% over the session.
TheStreet Ratings team rates Alpha Natural Resources Inc as a Sell with a ratings score of D. The 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 unimpressive growth in net income, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.”
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 893% when compared to the same quarter one year ago, falling from -$ 46.15 million to -$ 458.24 million.
- Net operating cash flow has decreased to $ 111.08 million or 34.77% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm’s growth is significantly lower.
- The share price of Alpha Natural Resources has not done very well: it is down 14.5% and has underperformed the S&P 500, in part reflecting the company’s sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- Alpha Natural Resources 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, Alpha Natural Resources reported poor results of -$ 11.06 a share vs. -$ 3.25 a share in the prior year. This year, the market expects an improvement in earnings (-$ 2.28 a share vs. -$ 11.06 a share).
- The company’s current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, Alpha Natural Resources’ 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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