Alpha Metallurgical Resources, Inc.

Alpha Metallurgical Resources, Inc. (NSE: AMR) operates as a mining company. It produces, processes, and sells met coal and thermal coal in Virginia and West Virginia. It operates through two segments, Met and CAPP-Thermal. The Met segments operates five active mines and two preparation plants in Virginia; and seventeen active mines and five preparation plants in West Virginia. The CAPP - Thermal segments operates one active mine and one preparation plant in West Virginia.

Why Investors Should Avoid ‘AMR’ at the current levels

• Potential Consolidation from the current trading levels: Shares of AMR have surged approximately 675% in the last one year, up ~152% in 3-Months and surged ~62% in the last one month. Moreover, on daily price chart, its shares are hovering in a steep overbought zone with 14-day RSI hovering at 91.3, implies a price consolidation the stock in near-term.
• Overvalued: From the TTM Price to Cash Flow multiple standpoint AMR trading at a multiple of 16.93x whereas peer’s average multiple stood at 7.04x, implies that AMR shares are trading at a premium of 140% against its peers.
• Significant Balance Sheet risk: Debt/Equity ratio of AMR as of September 31, 2021 stood at 2.04x compared to industry median of 1.40x, implies significant balance sheet risk.

Stock recommendation

Despite underlying commodity prices (Irone and steel) are moving higher on the back of the heightened geo-political tensions, AMR shares are fundamentally not so strong with extremely volatile margins and inconsistency in the topline growth. Also, its shares are trading at a stretched valuation and technical indicators indicates a potential consolidation in the stock in near term. Hence, we recommend an “Avoid” recommendation at the current price of USD 128.56 (as on March 08, 2022, at 01:58 PM ET).

1-Year price chart (as on March 08, 2022, at 01:58 PM ET). Source: REFINITIV, Analysis by Kalkine Group

*The reference data in this report has been partly sourced from REFINITIV.

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.