Paul Revere's famous ride to Lexington was fraught with danger, and even resulted in his temporary capture. After a wild ride of its own, Patriot Coal
Galloping with conviction from a 2007 IPO beneath $20 to a 2008 high above $80, shares of Patriot Coal have been thrown from a fickle steed to land 94% from their peak. Beneath $5, Fools might be tempted by perceived value in the shares, but recent earnings results may give them pause.
Patriot Coal reported net income of $65.2 million -- or $0.85 per share -- for the fourth quarter of 2008. Unfortunately, there's much more to the story. The company logged $127.7 million in non-cash accounting benefits on under-priced coal contracts from last year's acquisition of Magnum Coal. Subtracting that gain, we actually have a substantial loss of about $0.82 per share, or 17% worse than analysts had feared.
Reminiscent of similar challenges at Foundation Coal
With domestic steelmakers like United States Steel
All of these challenges aside, the primary concern for this Fool involves Patriot's balance sheet. With less than $3 million in cash, as little as $60 million remaining on a $500 million credit facility after looming expenditures, and more than $240 million in debt, I believe these factors are contributing to Patriot's low share price. With better-positioned miners like Peabody Energy
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Fool contributor Christopher Barker wishes he could squeeze mediocre coal miners into diamonds. He can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He owns shares of Arch Coal, Massey Energy, and Peabody Energy. The Motley Fool scrubs its disclosure policy before releasing it into the atmosphere.