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
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.
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