Warrior Met Coal (NYSE:HCC) rallies 7.4% this week, taking one-year gains to 116%

By
Simply Wall St
Published
April 19, 2022
NYSE:HCC
Source: Shutterstock

Unfortunately, investing is risky - companies can and do go bankrupt. But if you pick the right stock, you can make a lot more than 100%. For example, the Warrior Met Coal, Inc. (NYSE:HCC) share price has soared 114% in the last 1 year. Most would be very happy with that, especially in just one year! Also pleasing for shareholders was the 37% gain in the last three months. However, the longer term returns haven't been so impressive, with the stock up just 27% in the last three years.

Since it's been a strong week for Warrior Met Coal shareholders, let's have a look at trend of the longer term fundamentals.

See our latest analysis for Warrior Met Coal

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Warrior Met Coal went from making a loss to reporting a profit, in the last year.

When a company has just transitioned to profitability, earnings per share growth is not always the best way to look at the share price action.

We are skeptical of the suggestion that the 0.6% dividend yield would entice buyers to the stock. However the year on year revenue growth of 35% would help. Many businesses do go through a phase where they have to forgo some profits to drive business development, and sometimes its for the best.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

earnings-and-revenue-growth
NYSE:HCC Earnings and Revenue Growth April 19th 2022

We know that Warrior Met Coal has improved its bottom line lately, but what does the future have in store? So it makes a lot of sense to check out what analysts think Warrior Met Coal will earn in the future (free profit forecasts).

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Warrior Met Coal, it has a TSR of 116% for the last 1 year. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

It's nice to see that Warrior Met Coal shareholders have received a total shareholder return of 116% over the last year. Of course, that includes the dividend. That's better than the annualised return of 39% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand Warrior Met Coal better, we need to consider many other factors. For example, we've discovered 2 warning signs for Warrior Met Coal (1 is a bit concerning!) that you should be aware of before investing here.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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