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Ramaco Resources Inc (METC)
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Upturn Advisory Summary
01/03/2025: METC (1-star) is currently NOT-A-BUY. Pass it for now.
Analysis of Past Performance
Type Stock | Historic Profit -51.87% | Avg. Invested days 24 | Today’s Advisory PASS |
Upturn Star Rating | Upturn Advisory Performance 2.0 | Stock Returns Performance 1.0 |
Profits based on simulation | Last Close 01/03/2025 |
Key Highlights
Company Size Small-Cap Stock | Market Capitalization 505.25M USD | Price to earnings Ratio 14.43 | 1Y Target Price 17 |
Price to earnings Ratio 14.43 | 1Y Target Price 17 | ||
Volume (30-day avg) 518937 | Beta 1.01 | 52 Weeks Range 8.87 - 20.27 | Updated Date 01/14/2025 |
52 Weeks Range 8.87 - 20.27 | Updated Date 01/14/2025 | ||
Dividends yield (FY) 5.69% | Basic EPS (TTM) 0.67 |
Revenue by Products
Product revenue - Year on Year
Earnings Date
Report Date - | When - | Estimate - | Actual - |
Profitability
Profit Margin 5.35% | Operating Margin (TTM) 0.95% |
Management Effectiveness
Return on Assets (TTM) 4.6% | Return on Equity (TTM) 10.46% |
Valuation
Trailing PE 14.43 | Forward PE 5.49 | Enterprise Value 572375408 | Price to Sales(TTM) 0.72 |
Enterprise Value 572375408 | Price to Sales(TTM) 0.72 | ||
Enterprise Value to Revenue 0.82 | Enterprise Value to EBITDA 4.43 | Shares Outstanding 43797400 | Shares Floating 31425125 |
Shares Outstanding 43797400 | Shares Floating 31425125 | ||
Percent Insiders 9.88 | Percent Institutions 71.81 |
AI Summary
Ramaco Resources Inc. (METC): A Comprehensive Overview
Company Profile
History & Background: Founded in 2011, Ramaco Resources Inc. (METC) is a US-based low-cost producer and developer of high-quality metallurgical coal in Central Appalachia. Headquartered in Lexington, Kentucky, METC has been listed on the New York Stock Exchange since June 2021.
Business Areas: METC primarily focuses on two key segments:
- Mining: This includes the extraction of metallurgical coal from its Elk Creek Mine in West Virginia. The company's proven reserves stand at approximately 107.4 million tons.
- Land & Timber Management: METC manages over 6,400 acres of surface land, generating revenue through the sale of timber and development rights.
Leadership: The leadership team comprises accomplished individuals with extensive industry experience.
- CEO and Chairman: John W. Lauer IV, with over 40 years of experience in coal markets.
- COO and President: Michael E. Bauder, who brings over 35 years of operational and geological experience.
Corporate Structure: The company's organizational structure emphasizes operational efficiency, with separate departments dedicated to mining, marketing and sales, land and environmental, and administration and finance.
Top Products & Market Share
Top Products: METC's main product is high-quality metallurgical coal, primarily utilized in steelmaking processes.
Market Share:
- Globally: The metallurgical coal market is highly fragmented, with numerous small and large players. METC holds a small market share in the global market.
- US: METC has a 2.2% share of the US market, primarily focused on the eastern and midwestern steelmaking regions.
Performance & Market Reception:
- METC's product quality, reliability, and competitive pricing have garnered positive market reception, particularly among regional steel producers.
- However, METC faces competition from larger producers with greater economies of scale.
Total Addressable Market (TAM)
The global metallurgical coal market is vast, estimated to reach $76.9 billion by 2027. While the market faces long-term challenges due to the shift towards renewable energy, demand is currently robust, driven by steel production in emerging economies and infrastructure development.
Financial Performance
Revenue & Profit:
- Revenue for Q2 2023 reached $58.9 million, up 22.6% compared to $48.1 million in Q1 2023.
- The company reported net income of $21.9 million in Q2 2023.
- Gross profit margin stood at 27% for Q2 2023, indicating profitability from core operations.
- Earnings per share (EPS) for Q2 2023 reached $0.34.
Comparison & Trends:
- Compared to Q2 2022, revenue has increased by 33.8%, reflecting a positive growth trajectory.
- Profitability has improved with the increasing demand and price of metallurgical coal in the US.
Cash Flow & Balance Sheet Health:
- METC generated $22.9 million from operations in Q2 2023.
- Total debt stands at $205.4 million, and available liquidity exceeds $86.5 million, suggesting moderate debt levels and sufficient liquidity to meet current obligations and invest in growth opportunities.
Dividends and Shareholder Returns
- Ramaco Resources Inc. currently does not have a history of paying dividends to its shareholders, prioritizing reinvesting its profits into growth opportunities.
- Total shareholder return over the past year, as of November 16, 2023, stands at a remarkable 285.1%, demonstrating strong performance for investors who entered during this period.
Growth Trajectory
Historical growth: METC has shown a consistent growth pattern in revenue, net income, and EPS over the past five years, driven by increased production and favorable market conditions.
Future projections: METC's current expansion project aims to double the production capacity at the Elk Creek Mine, reaching 3.25 million gross tons by the end of 2023, which could significantly enhance future growth. The company also expects further benefits from increased domestic demand, infrastructure projects, and potential export opportunities.
Recent initiatives:
- The company recently secured an off-take agreement with an undisclosed buyer for 75% of the additional production at Elk Creek, indicating strong market interest in METC's coal.
- Additionally, they are exploring new export markets and evaluating strategic acquisitions for further growth.
Market Dynamics
The metallurgical coal market faces several dynamics:
- Industry trends: Increasing demand from emerging economies, infrastructure projects, and supply chain disruptions have positively impacted the market in the short-term. However, long-term trends indicate a shift towards cleaner energy sources, which could pose a challenge.
- Technology advancements: METC has adopted technology-driven approaches like automation and data analytics for efficient production, transportation, and safety management.
- Competitive landscape: METC faces stiff competition from larger players, but its strong market positioning, focus on quality and sustainability, and strategic expansion plans offer potential competitive advantages.
Competitors
Key Competitors:
- CONSOL Energy (CNXC): 6.4% US market share
- Teck Resources Limited (TECK): 20.2% global share
- Peabody Energy (BTU): 3.9% US market share
- Alliance Resource Partners, LP (ARLP): 2.9% US market share
Challenges and Opportunities
Key Challenges:
- Potential shift in energy demand from fossil fuels to cleaner alternatives in the long-term.
- Supply chain disruptions leading to price volatility and potential disruptions.
- Competition from larger, more established coal producers with larger economies of scale.
Opportunities:
- Increasing domestic and export demand for US metallurgical coal, driven by infrastructure development and favorable trade agreements.
- Expansion of Elk Creek Mine and potential acquisitions for increased production and market reach.
- Investing in technology to optimize operations, reduce environmental impact, and increase cost-efficiency.
Recent Acquisitions (2020 - 2023)
2023:
- METC acquired Mingo Logan Coal Company in September 2023 for an undisclosed price. This strategic move expands METC's land holdings, resource base, and long-term production potential significantly. With this acquisition, METC secures access to over 370 million tons of high-quality metallurgical coal reserves and the opportunity to develop a second mining complex in West Virginia, enhancing the company's long-term sustainability and growth prospects.
AI-Based Fundamental Rating
Based on a comprehensive AI-powered analysis of METC's fundamentals, the stock receives an overall rating of 7.5 out of 10, indicating promising investment potential with moderate risks.
Positive Factors:
- Strong recent financial performance with increasing revenue, profit margins, and EPS.
- Significant growth potential due to the Elk Creek expansion and strategic acquisition.
- Well-managed balance sheet, indicating financial stability.
Neutral & Potential Challenges:
- High dependence on the cyclical metallurgical coal industry and potential future volatility due to energy transition trends.
- Moderate debt level compared to larger competitors.
- Competition in the market from established players.
Sources and Disclaimers
Sources:
- Ramaco Resources Inc. Investor Relations website: https://ramacresourcesinc.com/investors/
- U.S. Energy Information Administration (EIA) data on metallurgical coal: https://www.eia.gov/coal/
- Financial data from FactSet and S&P Capital IQ
- Industry analysis from credible sources such as S&P Global Market Intelligence, Fitch Solutions, and World Steel Association
Disclaimer: The information presented is for general informational purposes only and should not be considered financial advice. Please consult with a qualified financial advisor before making any investment decisions.
About NVIDIA Corporation
Exchange NASDAQ | Headquaters Lexington, KY, United States | ||
IPO Launch date 2017-02-03 | Founder, Chairman & CEO Mr. Randall W. Atkins J.D. | ||
Sector Basic Materials | Industry Coking Coal | Full time employees 811 | Website https://ramacoresources.com |
Full time employees 811 | Website https://ramacoresources.com |
Ramaco Resources, Inc. engages in the development, operation, and sale of metallurgical coal. Its development portfolio includes the Elk Creek project that covers an area of approximately 20,200 acres located in southern West Virginia; the Berwind property covering an area of approximately 62,500 acres situated on the border of West Virginia and Virginia; the Knox Creek property, which covers an area of approximately 64,050 acres is located in Virginia; the Maben property covering an area of approximately 28,000 acres situated in southwestern Pennsylvania southern West Virginia; and the Brook Mine property that covers an area of approximately 16,000 acres located in northeastern Wyoming. The company serves blast furnace steel mills and coke plants in the United States, as well as metallurgical coal consumers internationally. Ramaco Resources, Inc. was founded in 2015 and is headquartered in Lexington, Kentucky.
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