enterprise value is now $10 per ton of coal. What is a good price per ton of coal reserve industry wide? WLT is known for having some of the best and highest quality met coal. If the $10 number goes to $12.50, the common stock doubles. Anybody have any comps on this? I was also encouraged to read they have the ability to ramp production up about 30% to 15 million tons a year if demand ever improves. If price went to $250 again and they did 15 million tons, EBITDA would be about $1.5 billion or 150% of the current market cap in one year. Something like that. So i guess that is the optionaility value that now exists for WLT as a play on price increases.
I don't think they call it bribery down there. Its called business. Really i've never been to Chile, but can only imagine. A week without contractors getting paychecks down there, i bet they are complaining to local officials to get the operation going again. The local econonmy must of imploded.
I'm trying to understand the value here too. They can make $7/share at high coal prices. If you put a 4 times multiple on peak earnings that is $28. I think that is probably what the company is worth. I think 3.00/share is reasonable mid cycle earnings run rate, they were doing that just 9-12 months ago. Put a 9 multiple on that and you get a $27/value. If it is ever believed that $225+ coal prices can be sustained, then its probably a $30-40 stock. But that will probably take a few years for market to believe that again. I don't think there is much downside to the current share price. Unless the world goes into a recession. I think it will settle back into a 20-23 trading range if i had to guess. Analysts mostly think its worth $30+. If the market stays bad and there is no good news on commodities, coal, or steel, then it could briefily touch $14's i guess. Risk reward seems ok. But who knows. i'm just pulling numbers out of a hat.
Well, if they don't own the mine as you say, maybe it doesn't matter. They own all the mining operation and capital investment. I'm sure they could strike a royalty deal with who you say is the rightful owner. It is worthless to him without $5 billion investment of his own. give him $50 million a year and smooth talk a few gvt officials with a few suit cases full of cash, and lets get this pig in operation. LOL. I enjoy your posts though and keep the info coming.
I don't think it will happen. But it could. They will surely talk to them about the 3 australian mines that they would like to sell. Why not just ask them to name a price for the entire company while they are at it. HAHA. Come on folks $18/share. Really?? How long will this last.
BHP sells at 14 times earnings. They could pay $35 for ABX and it would be accretive to earnings. They could clean up the balance sheet no problem, and diversify by adding 140 million ounces of gold to their portfolo.. Why not?
The BUT earnings repot was a good read. They paint a vey bullish picture for coal. Tons of new coal power plants coming online overseas. Nat gas too expensive except for here. Have to use coal. Its cycilcal.
Nat Gas is headed to $5 which is needed to get rig count up some. All the oversupply was burned off. ACI and BTU are at lows of year even though the nat gas fundamentals have reversed 100%. They are at same price or lwer than when Nat gas was $2's last summer and it looked hopeless. The time should be right for ACI BTU, possibly finally for WLT. I have to say though, it is mind boggling that every single name on the board took on billions of debt at the top. This is epic. And mindboggling. Every excecutive and banker should be fired across the board. Until this strong dollar theme plays out, it will be tough. But the mining sector will snap back 10% here. It is so oversold and can easily rally 10-20% and still be in the downtrend. I couldn't imagine sleeping being short here. Even worse than long. As long as Bernanke and Yen are printing all they can. Europe going to start printing even more soon.
This is a cyclical industry. Mid cycle earnings power is $3/share, peak cycle is $8/share. There is value at $17 i think. It could fall to $14 but i think it would come back to this price. Its $3 down $8 up in the near term. Some day steel produciton picks up, and the supply chain will want met coal all at once and the price of met coal will go up and so will Walter. Walter cash cost to mine is very low. They will not go bankrupt or have to issue new shares or anything anytime soon. They are not bleeding cash. Maybe a little after cap ex. I am a serious bag holder at $22. Better than most here. But after doing research, i'm not crazy about Walt valuation relative to other miners, but pushing the sell button here would be rash. Hunkering down and waiting for a better day.
Also, X could be set up for a trading rally this week. It hasn't had an up move yet this year, i'm thinking that Q2 guidance from AKS and X will not be a disaster. STLD was pretty optimistic about demand.
WLT assets on the books that they had before buying western coal are only valued at $675 million. At the time of the acquition WLT was $80 and had a market cap of $4.5 billion. I would say that the $675 million is probably understated by a factor of 2 or 3. Really looking at book value is very hard for these co's.
Just 2 quarters ago WLT was doing about $2/year in profits. So WLT is trading at about 9 times mid cycle earnings and about 3 times mid cycle ebitda. I think WLT is now in the realm of fairly valued. Especially when you consider that at $250 met they earn about $8/share. Not sure if prices can get back up there again. I don't think it is screaming undervalued relative to other coal stocks though. And you could be right that it is overvalued, but not by much anymore. Alot of analysts through out price targets in the $30s and even $40's. the lowest have moved to $19 and $20 i think.
Their is value, alot of optionality value. At $250 coal price They earn $6-$8/share maybe more. So its trading at 2 or 3 times peak earnings and 1.5 times peak Ebitda. So that is kinda cheap, LOL. Another thing is that at curent prices, even though reported earnings are negative, when you back out depreciation, amortization and other accoutning stuff, cash flow before cap ex isn't really negative, so its not like they are bleeding much. The valuation is probably in line with peers now so i wouldnt expect the cascade down to continue. It should just bounce around with ANR BTU ect, which aren't really crashing, and could be bottoming. Good luck.
Nat gas is $14 around the world versus $4 here. Overseas they are switching too coal from dangerous Nuclear and expesnive nat gas. Developing countries all powering up with coal. Coal works at $4+ nat gas and we are there. $4.50+ for appalachian i here. We will be there soon. Read BTU press release. Very bullish on the future of coal. Very imformative. Tons of new coal plants coming on line around the world.
That was Jan $23. I wonder how they got the value of $48? things were just as bad then as now for met coal pricing. If anthing, now they are on a slightly upswing. I hope there is something here so it can get back to $22. LOL.
if they can't, then this stock isn't worth more than current price. If it can then fair value is $25+. I It really appears that $30 was an amazing price to be short. It wasn't worth the price. I hope i'm wrong. I'm stuck in size position. It will go back to $22 i'm sure. But i don't know why it should. Is their any chance of Aubrey guy getting seats on board? Would that make the stock go way up?
I lost alot shorting this at $120, it would always squeeze to $130. What a joke. I was always too scared to short in high 30's because of that.
What makes you think it is muted? Were you expecting worse. It says the plants will have to all upgrade their stuff. Maybe some won't and will switch to nat gas? I know nothing.
are they thinking that housing will stall in 2nd half. I actually think that is possible on year over year comps. Not sure builders will have much year over year order growth come the fall. As the big jump up happened late last fall. What say you?? Seems better to be long than short at $17.30 though. I am long.
How could BTU be the best stock in the market on news yesterday. And then today it loses everything on nothing. The robots have lost control of the market.