$37.44
-1.03 (-2.68%)
Alpha Natural Resources, Inc. (ANR)
CAPS Rating:
The Company and its operating subsidiaries are engaged in the business of extracting, processing and marketing coal from deep and surface mines, located in the Central and Northern Appalachian regions of the United States.
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Okay, the merger did not go through. I am disappointed. We must now value ANR as a stand alone company. Two metrics currently stand out about ANR. First, they have approximately $600 million in the bank. So that means they have about $8.50 per share in cash. They still should generate good cash flows even in a slow economy. Coal contracts are pretty clean (no pun intended). Second, they are expected to earn about $12.50 per share in 2009. Say we cut that estimate by one third, we get around $8.33 per share estimate (way below the lowest current estimate for 2009). We give ANR a 6 multiple. $8.33 times 6 equals =$49.98.
Wow! Yes, that would be a 152% return from today's closing price. My opinion, ANR is undervalued and very attractively priced. Remember, the yield curve is very steep. Every central bank in the world is printing money like wild men. We could see a huge rebound in commodities and selling prices.