James River Coal’s Q3 Numbers Beat Estimates, But Share Price Gets the Shaft (JRCC)

Combine a bad earnings report with a regulatory environment that in all probability will become harsher, and the result is a bad recipe for shareholders of James River Coal (NASDAQ: JRCC). As the last ballots were counted on Wednesday morning, the Richmond, Virginia-based coal company released it third-quarter results, which did little to energize buying interest in shares of the company. James River reported a loss of $0.59 per share compared to a loss of $0.11 in the same quarter from a year ago. Revenues fell 5.2% from the previous year to $288.1 million.

On the good side of the ledger, the results beat Wall Street estimates, which looked for a loss of $0.98 per share and revenues of $22.5 million. Peter Socha, Chairman and CEO of James River Coal, said, “Despite the soft coal markets, we continue to be pleased with the performance of our mine operations team. They made a series of adjustments to their operating plans in response to the current markets.”

The company also announced it had bought back $23.9 million of its debt through mid-October. The debt repurchase raised some eyebrows with analysts who expressed concerns over the erosion of the company’s liquidity with such a move.

However, the earnings report and debt repurchase may have just been the icing on the cake for a bad day. Many see the election results from Tuesday night as a continuation of a restrictive energy and environmental policy toward coal. Shares of coal industry stocks across the board took it on the chin.

On Wednesday morning, sellers displayed no shyness in wanting to unload their shares of James River Coal. The stock gapped down almost 29%, or $1.35, on the opening print yesterday morning to start the Wednesday trading session at $3.35. Share prices rebounded a bit during the first 30 minutes of trading to an intraday high of $4.00. Traders stayed rather calm for a good portion of the day until the final hour of the session when sellers dumped another load of shares. The stock finished Wednesday’s session with a loss 30%. Shares closed down $1.41 to end the day at a price of $3.29. Traders exchanged 10.4 million shares compared to an average day when they swap just under 3 million shares.

Over the last year shareholders have literally taken a ride down a mine shaft. Shares touched their 52-week high exactly 52 weeks ago when the stock traded for $10.38 per share. Since then, share prices have gone downhill until finally bottoming out in late July at $1.68. Share prices rebound in the fall on hopes of higher coal demand from China, but Wednesday’s news sent the share price down once again.

James River Coal Company is headquartered in Richmond, Virginia. The company mines and sells metallurgical, bituminous, steam and industrial-grade coal through eight operating subsidiaries located throughout Eastern Kentucky, Southern West Virginia and Southern Indiana. The company was founded in 1988.

 

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Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email (alanmasterson@wallstreetpr.com) or his Google+ page (https://plus.google.com/103338576216002376250).

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