Its debt load is very manageable, with a total debt to equity ratio of 0.83. Its low cost structure has allowed it to post a profit margin of -0.8%, a very strong number considering the current industry challenges.
On a revenue basis, Alpha Natural Resources, Inc. (NYSE:ANR) is evenly split between the metallurgical and thermal coal markets. Unlike Cloud Peak Energy, Alpha Natural Resources, Inc. (NYSE:ANR) has many assets in the eastern U.S. and an elevated cost structure. Its gross margin of 15.6% is lower than Cloud Peak’s, Arch Coal Inc (NYSE:ACI)’s and Peabody Energy Corporation (NYSE:BTU)’s. Also, China’s decreased demand for steel is hurting Alpha Natural Resources, Inc. (NYSE:ANR)’s metallurgical business. The company is expected to post an EPS loss of $2.23 in 2013 and $1.54 in 2014.
Even though its total debt to equity ratio of 0.7 is relativity low, the company is best avoided. With high cost mines along the eastern seaboard, its margins are questionable. Its current profit margin of -39.5% is the worst out of the four miners mentioned in this article.
Coal is not a sexy energy source like thorium or natural gas, but it gets the job done. Developing the infrastructure for natural gas is very expense and nations like China and India find it easier to stick with coal. Peabody and Cloud Peak Energy are two good ways to play increasing thermal coal demand, but Peabody’s Australian mines make it the better choice. Alpha Natural Resources and Arch Coal Inc (NYSE:ACI) are working to improve their operations, but with high cost structures they are best left for another day.
The article Is Coal Worth Looking At? originally appeared on Fool.com.
Joshua Bondy has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Joshua is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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