Wednesday, June 4, 2014

Here's Why Walter Energy Isn't Impacted by the Proposed EPA Rules


The new proposed rules by the Environmental Protection Agency, or EPA, have far reaching impacts on coal used by power plants to produce electricity. It doesn't, however, impact coal used for steel and especially that exported to foreign locations. Based on this news, the large 10% decline by Walter Energy (NYSE: WLT  ) is perplexing considering the coal miner is almost completely focused on the metallurgical export market.

With the recently released first-quarter results, the company has plenty of issues outside the EPA. From a China slowdown to an oversupplied metallurgical coal market, the company has plunged to new low after new low. Ironically, the ruling has a greater impact on Peabody Energy (NYSE: BTU  ) and the majority of stocks in the Market Vectors Coal ETF, which ended up virtually flat the day of the ruling. The reaction is very suggestive of a market overly negative on Walter Energy and fellow met coal leader Alpha Natural Resources (NYSE: ANR  ) despite the smaller EPA impact.

Read the full article here.


Disclosure: Long ANR. Please read disclaimer page for more details.

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