Why Alpha Natural Resources' Shares Plunged
Aug 8th 2012 3:41PM
Updated Aug 8th 2012 3:44PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of coal miner Alpha Natural Resources (NYS: ANR) fell 10% today after the company posted a massive loss.
So what: Revenue rose 15% to $1.85 billion, but was below the $1.93 billion analysts had expected. On the bottom line, the company lost a whopping $2.2 billion, or $10.14 per share, driven by a writedown of the company's Massey Energy acquisition. Excluding one-time items, loss per share was $0.33, a penny below expectations.
Now what: When a company reports a loss that's bigger than its market cap, there's no way to sugarcoat it, things aren't going well. With all coal prices falling and Alpha Natural posting a big loss, writedown or not, I see no reason to buy shares here. Coal is fundamentally being removed from our electricity generation in favor of natural gas, and demand will never return to what it once was.
Interested in more info on Alpha Natural Resources? Add it to your watchlist by clicking here.
The article Why Alpha Natural Resources' Shares Plunged originally appeared on Fool.com.Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.