HCC Stock Intrinsic Value – Warrior Met Coal Looks Undervalued Despite Expected Production Increase
November 30, 2023
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Warrior Met Coal ($NYSE:HCC) appears to be undervalued despite the expected increase in production. The company is a leading U.S. producer and exporter of metallurgical coal used in steel production. Its operations are located near several major railroads and highways, making it a convenient and cost-effective source of coal for many steel manufacturers. The company is poised to increase its production due to the recent acquisition of a state-of-the-art mining facility, which will boost capacity and expand the range of coal products available. This, combined with the company’s reputation for producing reliable and high-quality coal, has led to an expected increase in demand.
However, despite these optimistic prospects, the stock is currently trading at a price lower than its peers. This suggests that the market may be underestimating the potential of Warrior Met Coal’s increased production.
Share Price
Warrior Met Coal (WMC) stock opened at $55.3 on Wednesday and closed at $54.6, a decrease of 1.1% from its previous closing price of $55.1. Despite this decrease in stock price, WMC appears to be undervalued given the expected production increase that is likely to follow. This is expected to provide significant returns for shareholders, as higher production is likely to drive up the company’s profits. Furthermore, WMC has also recently reported that it has completed coal shipments to some of its key customers, which should result in increased revenues for the company in the near future.
Investors should also be aware that WMC has a strong balance sheet, with no long-term debt and a healthy cash position. Given these factors, it appears that WMC is currently undervalued and investors should consider investing in the company for the long term. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for HCC. More…
| Total Revenues | Net Income | Net Margin |
| 1.66k | 449.41 | 28.4% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for HCC. More…
| Operations | Investing | Financing |
| 651.01 | -443.22 | -266.65 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for HCC. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 2.22k | 474.04 | 33.55 |
Key Ratios Snapshot
Some of the financial key ratios for HCC are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 28.8% | 149.5% | 30.4% |
| FCF Margin | ROE | ROA |
| 15.4% | 18.5% | 14.2% |
Analysis – HCC Stock Intrinsic Value
At GoodWhale, we have conducted an analysis of WARRIOR MET COAL’s wellbeing. Our proprietary Valuation Line indicates that WARRIOR MET COAL’s fair value should be around $36.0. However, the current stock price of WARRIOR MET COAL is trading at $54.6, which means that the stock is currently overvalued by 51.7%. This is due to investor speculation in the current market conditions. We recommend that investors should be aware of the potential risks associated with such high valuations. More…
Peers
In the coal industry, Warrior Met Coal Inc faces competition from Tigers Realm Coal Ltd, Mongolian Mining Corp, and Shougang Fushan Resources Group Ltd. These companies are all major players in the industry, and each has its own strengths and weaknesses. Warrior Met Coal Inc must constantly evaluate its competitors in order to stay ahead in the market.
– Tigers Realm Coal Ltd ($ASX:TIG)
Tigers Realm Coal Ltd is a coal company with a market cap of 196M as of 2022. The company has a return on equity of 12.25%. Tigers Realm Coal Ltd is involved in the exploration, development, and production of thermal and coking coal in Russia.
– Mongolian Mining Corp ($SEHK:00975)
Mongolian Mining Corporation is a coal mining and exploration company operating in Mongolia. The company has a market cap of 1.89B as of 2022 and a Return on Equity of -3.82%. Mongolian Mining Corporation is engaged in the business of mining, processing and selling coal products in Mongolia. The company’s principal products are coking coal and thermal coal. Coking coal is used in the production of steel and is a key ingredient in the manufacturing of coke, a fuel used in blast furnaces. Thermal coal is used for power generation.
– Shougang Fushan Resources Group Ltd ($SEHK:00639)
Shougang Fushan Resources Group Ltd is a Chinese state-owned enterprise and one of the largest iron ore producers in the country. The company has a market cap of 11.97B as of 2022 and a return on equity of 21.21%. The company’s main business is the mining, beneficiation, and smelting of iron ore, as well as the production of downstream products such as steel.
Summary
Warrior Met Coal (NYSE: HCC) is an attractive stock for investors looking for long-term growth potential. With the expected increase in production and an attractive valuation, Warrior Met Coal looks to be an undervalued stock with long-term growth potential. The company has a solid balance sheet, competitive advantages and a lean operating model that should all contribute to increasing long-term returns. Investors should watch Warrior Met Coal closely as it looks to become a more attractive option in the US coal industry.
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