The first half of 2012 is in the rearview mirror, and investors are gearing up for what looks to be an action-packed ending. There are bound to be some big winners -- and more than a few duds -- no matter what happens in the United States and abroad.
Will your favorite stock have its victory lap as we hit the home stretch, or will it get passed by? First-half performances can hold some clues, so let's look to the recent past to find out whether Walter Energy
First-half recap
Walter Energy's stock has not had a good year at all:
WLT Total Return Price data by YCharts
Here are a few financial snapshots of its recent performance:
|
Indicator |
Result |
|---|---|
| Market cap | $2.33 billion |
| TTM revenue | $2.78 billion |
| TTM net income | $308 million |
| TTM free cash flow | $116 million |
| MRQ revenue | $632 million |
| MRQ net income | $41 million |
| MRQ free cash flow | ($50 million) |
| MRQ revenue / net income year-over-year change | 54.5% / (50%) |
| P/E and forward P/E | 8.0 / 4.8 |
| Price to free cash flow | 20.7 |
| Motley Fool CAPS rating (out of 5) | **** (Find out more ) |
Source: Morningstar. TTM = trailing-12-month. MRQ = most recent quarter.
What the numbers don't tell you
Walter Energy's reported earnings have been underwhelming this year. Its fourth quarter was a whiff on both the top and bottom lines. The first quarter wasn't much better, as an increase in revenue over the year-ago quarter matched with lower net income for the same period. The reasons for that weakness all boil down to a slump in Walter's core business of metallurgical coal.
Fool contributor Sean Williams highlighted the company's weaknesses when it hit a 52-week low earlier this month. Compared with Arch Coal
WLT Total Return Price data by YCharts
Steel producers are also having problems. Both ArcelorMittal
Mittal's net income, often well over $1 billion quarterly, has been in the dumps, barely managing to break even in its most recent quarter. The company's annual earnings have yet to come close to matching pre-recession highs. Even Chinese steelmakers, once buoyed by high construction demand, are cutting production as weakening construction output becomes a reality.
The coal industry recently witnessed a bankruptcy in its ranks, as Patriot Coal went under last week. Walter Energy is in a much better position, as analysts still anticipate strong earnings next year. As long as Walter can keep paying its debt -- which may become a bit hairy if major slowdowns occur, as the company has $2.3 billion in long-term debt against just $138 million in cash on hand -- it ought to survive to see a much stronger year in 2013. Coal-fired power plants may be on their way out, but that doesn't mean metallurgical coal will be eliminated too.
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