Tomahawk, WI 04/01/2014 (Basicsmedia) – All is not well with coal and lots of players in the industry are suffering. Walter Energy, Inc. (NYSE:WLT) is no exception to that rule.

Analysts Lose Faith

The verdict is in and the news is not good for Walter Energy. The company’s stock was downgraded by UBS AG (NYSE:UBS) to “neutral” from “buy” and the price target was lowered from $25 to $8.

The analysts were not impressed with Walter Energy’s high balance sheet leverage. Coking coal prices are also likely to stay low in the medium-term, according to UBS’ report.

WLT will find it tough to raise $250 million in asset sales as it plans to, because of the weak market conditions.

Financial Outlook

Walter Energy, Inc. (NYSE:WLT) reported $0.55 EPS in the last quarter on revenues of $472.00 million for the quarter. Analysts expect Walter Energy to post $-4.07 EPS for the current year.

Walter Energy’s debt-to-equity ratio is higher than the industry average at 3.69 indicating high risk associated with the high debt levels in the company. Walter’s return on equity significantly trails its industry peers and the SP&P 500. WLT’s net profit margin of -36.93% is significantly below the industry average. Walter’s gross profit margin — 17.54% at present — has increased significantly compared to the same period last year.

The net income for the company declined from -$70.97 to -$174.34 million representing a decrease of 145.7% quarter-on-quarter. Walter Energy has significantly underperformed in its net income levels compared to the S&P 500 or the Metals & Mining industry.

The stock has lost 54.83% YTD and 73.4% in the year from April 01, 2013 to March 31, 2014.

With battery and fuel cell stocks such as Plug Power Inc (NASDAQ:PLUG) and FuelCell Energy Inc (NASDAQ:FCEL) being the darlings of the markets for now, expect coal stocks to continue to struggle for some time to come.

Per most analysts, the verdict for Walter Energy, Inc. (NYSE:WLT)’s stock is “Sell.”

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