Is Arch Coal a Dangerous Investment?

E = Equity to Debt Ratio Is Weak

The debt-to-equity ratio for Arch Coal is significantly weaker than the industry average of 0.70. It’s also weaker than the debt-to-equity ratios for Alpha Natural Resources and Peabody Energy.

Debt-To-Equity

Cash

Long-Term Debt

ACI

1.79

$1.02 Billion

$5.12 Billion

ANR

0.68

$1.04 Billion

$3.39 Billion

BTU

1.27

$536.60 Million

$6.25 Billion

 

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

T = Technicals Are Weak

Arch Coal has performed poorly over the past three years. It should be noted that this is an industry trend, not a company-specific trend. The past month has been stronger for Arch Coal, but it has been far from a standout performance.

1 Month

Year-To-Date

1 Year

3 Year

ACI

4.90%

-29.39%

-51.08%

-76.65%

ANR

1.95%

-19.61%

-48.25%

-84.79%

BTU

-0.10%

-22.54%

-28.09%

-53.99%

 

At $5.14, Arch Coal is trading below all its averages.

50-Day   SMA

5.98

100-Day   SMA

6.58

200-Day   SMA

6.67

 

E = Earnings Have Been Weakening                

Annual revenue has remained relatively steady, which is a good sign. However, earnings have weakened over the past two years.

2008

2009

2010

2011

2012

Revenue   ($)in   billions

2.98

2.58

3.19

4.29

4.16

Diluted   EPS ($)

2.45

0.28

0.97

0.74

-3.24

 

When we look at the last quarter on a year-over-year basis, we see declines in revenue and earnings.

12/2011

3/2012

6/2012

9/2012

12/2012

Revenue   ($)in   billions

1.23

1.04

1.06

1.09

968.23M

Diluted   EPS ($)

0.32

0.01

-2.05

0.22

-1.42

 

Now let’s take a look at the next page for the Trends and Conclusion. Is this stock an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY?

More Articles About: