American Resources Corp (NASDAQ: AREC)

Sector: Basic Materials Industry: Coking Coal CIK: 0001590715
Market Cap 239.81 Mn
P/B -3.62
P/E -6.46
P/S 2,523.69
ROIC (Qtr) -17.50
Div Yield % 0.00
Rev 1y % (Qtr) -99.93
Total Debt (Qtr) 243.35 Mn
Debt/Equity (Qtr) -3.67
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About

American Resources Corp, also known as AREC, is a diversified energy company with a primary focus on metallurgical coal production and processing. The company has experienced significant transformations in its business operations and structure over time, with its most notable shift occurring in 2017 when it executed a share exchange agreement with Quest Energy Inc., becoming a wholly-owned subsidiary of American Resources Corp. Today, American Resources Corp operates in the energy industry, specifically in metallurgical coal production and processing....

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Investment thesis

Bull case

  • Long-term investments of 152.11M provide solid 0.80x coverage of long-term debt 189.61M, indicating strategic financial planning.
  • Tangible assets of 202.36M provide robust 10.41x coverage of other current liabilities 19.44M, indicating strong asset backing.
  • Retained earnings of (276.10M) represent substantial 4.17x of equity (66.29M), indicating strong internal capital generation.
  • Cash reserves of 6.70M exceed inventory value of 1.08M by 6.21x, indicating strong liquidity and inventory management.
  • Tangible assets of 202.36M provide robust 2.39x coverage of current liabilities 84.78M, showing strong asset backing.

Bear case

  • Operating cash flow of (14.34M) barely covers its investment activities of 26.54M, with a coverage ratio of -0.54, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • The company's operating cash flow of (14.34M) shows concerning coverage of stock compensation expenses of 3.04M, with a -4.72 ratio indicating potential earnings quality issues.
  • Free cash flow of (16.44M) provides weak coverage of capital expenditures of 2.10M, with a -7.83 ratio suggesting additional external financing needs for growth initiatives.
  • Operating earnings of (25.44M) show weak coverage of depreciation charges of 2.38M, with a -10.69 ratio indicating high capital intensity and potential reinvestment needs.
  • Long-term investments of 152.11M represent a high 4.02x of fixed assets 37.85M, indicating potential overexposure to financial assets versus operational capabilities.

Revision of Prior Period Breakdown of Revenue (2023)

Peer comparison

Companies in the Coking Coal
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 HCC Warrior Met Coal, Inc. 4.48 Bn 78.63 3.42 270.94 Mn
2 AMR Alpha Metallurgical Resources, Inc. 2.37 Bn -50.82 1.06 4.97 Mn
3 METC Ramaco Resources, Inc. 0.79 Bn -23.97 1.36 136.66 Mn
4 SXC SunCoke Energy, Inc. 0.64 Bn -4.27 0.41 695.70 Mn
5 AREC American Resources Corp 0.24 Bn -6.46 2,523.69 243.35 Mn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.35 1.30
EV to Cash from Ops. EV/CFO -33.20 6.27
EV to Debt EV to Debt 1.96 82.62
EV to EBIT EV/EBIT -18.72 -5.13
EV to EBITDA EV/EBITDA -18.08 28.89
EV to Free Cash Flow [EV/FCF] EV/FCF -28.96 3.80
EV to Market Cap EV to Market Cap 1.99 1.41
EV to Revenue EV/Rev 5,010.65 1,003.45
Price to Book Value [P/B] P/B -3.62 0.54
Price to Earnings [P/E] P/E -6.46 -1.38
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 -22.95
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 8.30
Dividend per Basic Share Div per Share (Qtr) 0.00 0.23
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 3.54
Interest Coverage Int. cover (Qtr) -2.17 -2.77
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -150.61 -16.23
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -95.85 109.36
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -16.71
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 57.56 -59.90
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 44.74 -32.77
EBIT Growth (1y) % EBIT 1y % (Qtr) 57.56 -66.17
EBT Growth (1y) % EBT 1y % (Qtr) 44.16 -76.68
EPS Growth (1y) % EPS 1y % (Qtr) 47.13 -73.57
FCF Growth (1y) % FCF 1y % (Qtr) 39.29 -60.16
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 115.59 -8.29
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.00 0.61
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.06
Cash Ratio Cash Ratio (Qtr) 0.08 1.00
Current Ratio Curr Ratio (Qtr) 0.10 2.47
Debt to Equity Ratio Debt/Equity (Qtr) -3.67 -0.46
Interest Cover Ratio Int Coverage (Qtr) -2.17 -2.77
Times Interest Earned Times Interest Earned (Qtr) -2.17 -2.77
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) -24,264.60 -4,844.46
EBIT Margin % EBIT Margin % (Qtr) -26,767.38 -5,353.16
EBT Margin % EBT Margin % (Qtr) -39,087.51 -7,817.94
Gross Margin % Gross Margin % (Qtr) 1,392.90 291.70
Net Profit Margin % Net Margin % (Qtr) -39,087.50 -7,817.48