• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Investing
  3. / Stocks

I've Dug Up This Coal Miner in My Search for Value Stocks

It's a metallurgical coal company that operates two mines in Alabama, and its shares are up for the year in a market that's way down.
By JONATHAN HELLER
Oct 03, 2022 | 10:30 AM EDT
Stocks quotes in this article: HCC

So long to the third quarter, which turned out to be somewhat interesting. While large-caps took it on the chin as the S&P 500 fell 5.28%, smaller names fared relatively well. The Russell 2000 (down 2.19%) and Russell Microcap (down 0.48%) turned in better performances than I would have expected under the circumstances. Year to date, though, there's little room between the S&P 500 (down 24.77%), Russell 2000 (down 24.59%) and Russell Microcap (down 25.48%). That small performance spread remains very curious to me.

Meanwhile, there's a new kid in triple-net land, which consists of companies trading at between two and three times net current asset value, or NCAV. And this one may be a bit of a surprise given the industry in which it operates.

Warrior Met Coal (HCC) , which is up about 11.5% year to date, currently trades at 2.96x NCAV. The metallurgical coal company operates two underground mines in Alabama and has had a solid 2022, earning $443 million, or $8.59 a share, in its first six months on revenue of $1 billion. That's thanks to rising metallurgical coal prices ($377 a ton versus $180 last year). In the most recently reported third quarter, Warrior Met's earnings per share of $5.87 were well ahead of consensus ($4.97).

Analysts don't expect the next two years to be nearly as lucrative for Warrior Met given consensus earnings estimates of $5.54 for 2023 and $4.30 for 2024. Still, that puts the forward price-to-earnings (P/E) ratio at about 5 and 6.5, respectively.

Warrior Met ended the second quarter with $653 million, or nearly $12.65 a share, in cash and short-term investments, up from $275 million ($5.35 a share) for the like quarter last year. Debt stood at $381 million, putting net cash at $5.25 a share at the end of the second quarter.

The regular cash dividend of six cents a share equates to a seemingly small 0.8% dividend. However, the company also pays special cash dividends when warranted:

  • 2021: $1.30 
  • 2020: $0
  • 2019: $4.416
  • 2018: $6.529
  • 2017: $11.21

A few words of caution on Warrior Met, and for that matter any name sporting a relatively large amount of trailing 12-month earnings: You need to look at prospective forward earnings, not what has happened in the past. Warrior Met currently boasts trailing 12-month earnings per share of $12.02, putting the trailing P/E ratio at just under 2.4. That number is of no value to prospective investors.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Heller had no positions in the stocks mentioned.

TAGS: Earnings | Investing | Stocks | Value Investing | Energy | Metals & Mining | Real Money

More from Stocks

FS Insight Weekly Roadmap: Market Response to Hawkish Fed Is an Overreaction

Tom Lee and the FSI Team
Sep 23, 2023 9:10 AM EDT

Here's why we believe 'higher for longer DUE to higher GDP' has a more dovish tone, and remain constructive for the rest of the year.

This Dividend Aristocrat Has All the Raw Materials to Make It a Top Pick

Bob Ciura
Sep 23, 2023 7:30 AM EDT

This name has been down, but now I think it's charged up to cruise into the year's end.

The Bears Just Moved Into Wall Street

James "Rev Shark" DePorre
Sep 22, 2023 4:26 PM EDT

Technically, the bears are in control of this market now.

Don't Be a Sap and Step Into a Value Trap

Bret Jensen
Sep 22, 2023 12:30 PM EDT

There are plenty of stocks that look like value plays but aren't as the market continues to drag more share prices down.

My Stock Pick for the Rest of 2023? The Big 'B'

Stephen Guilfoyle
Sep 22, 2023 11:17 AM EDT

Here's why I'm going with a diversified value name.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 12:20 PM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    Trading in Multiple Time Frames
  • 10:24 AM EDT BRUCE KAMICH

    This Could Get Messy

    A number of key stocks are getting close to import...
  • 01:41 PM EDT CHRIS VERSACE

    Latest AAP Podcast With Helene Meisler!

    Listen in as the Action Alerts PLUS podcast talks ...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2023 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login