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
Walter Energy's stock has not had a good year at all:
Here are a few financial snapshots of its recent performance:
|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
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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