Wang & Lee Group board approves 250-to-1 reverse share split
On Friday, Benchmark analyst Nathan P. Martin confirmed a Buy rating for SunCoke Energy (NYSE: SXC) shares, maintaining the $13.00 price target. Currently trading at $9.60, InvestingPro analysis suggests the stock is undervalued, with analysts setting price targets between $11-13. SunCoke Energy outperformed expectations with a fourth-quarter adjusted EBITDA of $66 million, surpassing the consensus estimate of $63 million. Despite this achievement, the company provided a forecast for full-year 2025, projecting a consolidated adjusted EBITDA of $210 million to $225 million, a decrease from the $273 million reported in 2024 and lower than Benchmark’s previous estimate of $250 million. The company maintains strong fundamentals, with InvestingPro data showing a healthy current ratio of 2.31 and an impressive return on equity of 15%.
The expected decline in EBITDA for 2025 is primarily attributed to a reduced contribution from the domestic coke segment. Sales are projected to remain relatively stable, but profit margins are likely to face pressure. This is due to less favorable terms on the extended Granite City contract and increased spot market exposure in the second half of the year at Haverhill, where a long-term agreement renewal is pending.
In contrast, the logistics segment is expected to perform similarly year-over-year, bolstered by new and prolonged take-or-pay contracts. Despite experiencing setbacks beyond its control, which have caused delays, SunCoke Energy’s management remains confident in the economic potential of the GPI project. The GPI project is seen as an opportunity for SunCoke to renew the long-term contract at Granite City and to diversify by entering the Electric Arc Furnace (EAF) steelmaking segment.
Regarding capital expenditure, Martin noted that the initial estimate equaled about two years of free cash flow in addition to some borrowing from a revolving credit facility. He emphasized that SunCoke Energy is likely to continue exercising caution with significant spending or shareholder returns until a firm decision on the GPI project is reached. Worth noting, InvestingPro data reveals the company has maintained a strong dividend program with a current yield of nearly 5% and has raised its dividend for three consecutive years. For deeper insights into SunCoke Energy’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
In other recent news, SunCoke Energy has disclosed its Q3 results for 2024, reporting an upturn in the full-year consolidated adjusted EBITDA guidance to between $260 million and $270 million. This adjustment is primarily attributed to a robust logistics performance and a one-time gain from a regulatory exemption related to federal black lung liabilities. Despite challenges in the Domestic Coke segment, the company posted a net income of $0.36 per share, marking an increase from the previous year.
SunCoke Energy’s Q3 consolidated adjusted EBITDA reached $75.3 million, bolstered by a one-time gain of $9.5 million due to a regulatory exemption. An agreement with the U.S. Department of Labor eliminated most of SunCoke’s accrued black lung liabilities, leading to a $9.5 million pre-tax gain. The company’s leverage stood at 1.86 times on a trailing 12 months adjusted EBITDA basis.
In other developments, SunCoke extended its Granite City coke supply agreement with U.S. Steel and signed a three-year coal handling agreement at the KRT Logistics facility, which includes a $12 million expansion project. However, full-year domestic coke adjusted EBITDA guidance was revised downward due to lower coal-to-coke yields and impacts from adverse weather conditions. The company continues to work on the GPI project and is seeking a final agreement.
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