Watch-Out for This NYSE-Listed Metals and Mining Stock – HCC

Warrior Met Coal, Inc.

Warrior Met Coal, Inc. (NYSE: HCC) based in Brookwood, Alabama, southwest of Birmingham and near Tuscaloosa, is a producer and exporter of metallurgical coal for the global steel industry. These coal mines are located 1,400 to 2,100 feet underground, making them some of North America's deepest vertical shaft coal mines. Methane gas is also extracted from the Blue Creek coal seam by the company's operations.

Key Highlights

• The company reported YoY growth of 35.32% in net revenues to USD 1.06 billion in FY21 (ended December 31, 2021) compared to USD 782.74 million in FY20.
• HCC reported net profit of USD 150.88 million in FY21 vs. a net loss of USD 35.76 in FY20.
• As of December 31, 2021, the company had cash and cash equivalents (including short-term investments) of USD 408.39 million and total debt of USD 391.86 million.
• HCC’ net margin for FY21 was 14.2%, higher than the industry median of 13.1%
• Its ROE was 18.9% in FY21 vs. the industry median of 8.6%.
• On February 21, 2022, HCC announced that its board of directors had approved an increase in the regular quarterly cash dividend by 20%. On February 18, 2021, the board of directors declared a regular quarterly cash dividend of USD 0.06 per share to be paid on March 10, 2022, to stockholders of record as of the close of business on March 3, 2022.
• Stock is currently trading above its crucial short-term (50-day) and long-term (200-day) SMA support levels, a bullish indicator.
• The stock is leaning towards the higher end of its 52-week range of USD 15.07 to USD 42.95.
• HCC's stock price increased 74.09% and 135.62% in the past six and nine months, respectively.

Conclusion: Considering the surge in topline, improved profitability, technical indicators, and associated risks, we recommend a "Watch" rating on the stock at the closing price of USD 38.43, up 0.03%, as of March 21, 2022.

Technical Price Chart (March 21, 2022). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above.