The European energy crisis caused by the Russia-Ukraine conflict has increased global reliance on coal. Coal’s use for power generation is expected to increase in 2022, as high gas prices have led to the replacement of gas with coal in markets with spare coal plant capacity.
In the United States, coal production has risen considerably. The Energy Information Administration stated that production is up 6% from the first quarter of 2021. Global use of coal has been on the rise due to the energy crisis in Europe, and China has ramped up production and consumption of coal.
According to a Technavio report, the global coal mining market is expected to grow by $64.68 billion at a 2.2% CAGR until 2025, driven by better energy generation technology.
SunCoke Energy, Inc. (SXC)
SXC is an independent producer of coke that offers metallurgical and thermal coal. The company operates through three broad segments Domestic Coke; Brazil Coke; and Logistics. It also provides handling and mixing services to its customers.
On June 28, SXC announced it had entered into a non-binding letter of intent with United States Steel Corporation (X) to process iron ore for manufacturing granulated pig iron on a ten-year initial term. This is expected to enhance SXC’s footprint.
SXC’s sales and other operating revenue increased 22.2% year-over-year to $439.80 million in the first quarter that ended March 31. Its operating income grew 27.2% from the year-ago value to $48.60 million, while net income attributable to SXC improved 78.8% year-over-year to $29.50 million. Earnings attributable to SXC per common share increased 75% from its year-ago value to $0.35.
The consensus EPS estimate of $0.94 for the fiscal year ending December 2022 indicates an 80.8% improvement year-over-year. The consensus revenue estimate of $1.77 billion for the same fiscal year reflects a 21.5% increase from the same period last year.
The stock has gained 6.4% year-to-date and 1.5% over the past five days to close its last trading session at $7.01.
SXC’s POWR Ratings reflect this promising outlook. The stock’s overall A rating translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
SXC is rated an A in Sentiment and a B in Value, Momentum, and Quality. Within the A-rated Coal industry, it is ranked #2 out of 11 stocks. Click here to see additional POWR Ratings for Growth and Stability for SXC.
Warrior Met Coal, Inc. (HCC)
HCC produces and exports non-thermal metallurgical coal for the steel industry. The company markets its metallurgical coal to a customer base of blast furnace steel producers. It also sells natural gas extracted as a byproduct from coal production.
In May, HCC announced the relaunch of its Blue Creek reserves into a new longwall mine located in Alabama near its existing mines. This growth investment is expected to bolster the company’s position as a pure-play producer of premium metallurgical coal products.
HCC’s total revenues came in at $378.65 million for the first quarter that ended March 31, representing a 77.1% year-over-year growth. Its adjusted EBITDA grew 417.3% from the prior-year quarter to $243.82 million.
Its adjusted net income rose 3,844.4% from the same period last year to $153.60 million. The adjusted net income per share increased 3,612.5% from the prior-year period to $2.97.
Analysts expect HCC’s revenue for the second quarter (ended June 2022) to be $574.69 million, indicating a 152.7% year-over-year growth. The company’s EPS for the same quarter is expected to increase 1,997% from the prior-year quarter to $5.24.
HCC has gained 69.8% over the past year and 15.8% over the last six months to close its last trading session at $29.94.
It is no surprise that HCC has an overall B rating, which translates to Buy in our POWR Rating system. The stock has an…
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