Walter Industries, Inc. (NYSE:WLT)

CAPS Rating: 3 out of 5

The Company, through its operating segments, offer a diversified line of products and services including coal and natural gas, furnace and foundry coke, slag fiber, mortgage financing and home construction.

Recs

1
Player Avatar wil3714 (< 20) Submitted: 6/10/2012 1:24:25 AM : Outperform Start Price: $46.40 WLT Score: -142.12

WLT deals mostly with metallurgical coal for global steel production and is the world's leader. If you look at WLT, its trading at around $47 with a market cap of around $3billion. In 2011, WLT acquired Western COal for $3.7billion. How can WLT be worth under $3billion when Western Coal acquisition was valued over that? WLT has global diversification in the US, Canada, and UK.

WLT has been slaughtered even though it continually is profitable over the years. 2012 EPS is projected at $4.30 and 2013 EPS is $6.88. WLT trades at 9.6X 2012 and 6.8X 2013 estimates. 90% of sales are international so WLT isnt affected much by US mandate to limit coal production or shutdown plants. MRQ shows record revenue of $2.6billion in 2011 increased 62% yoy.

WLT has projected to increase supply to 11.5-13million metric tons is record production. With upgrades and downgrades in past weeks in May, Goldman raised sector to attractive and Global Hunter Securities raised its price target to $79.

No doubt the market is in turmoil and the sector in disastrous but the decline is over done. The major decline makes this stock very attractive for a takeover as firms are looking for commodity assets to buy as Morgan Stanley is looking to selloff its assets to private equity.

Featured Broker Partners


Advertisement