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On Friday, Jefferies initiated coverage on Core Natural Resources (NYSE:CNR) with a Hold rating and set a price target of $93.00. The company, currently valued at $2.7 billion, maintains a strong financial position with more cash than debt on its balance sheet. According to InvestingPro analysis, CNR demonstrates "GREAT" overall financial health, supported by robust cash flows and profitable operations. The firm provided insights into the company’s position within the U.S. coal sector, highlighting its unique asset base which includes significant exposure to both seaborne metallurgical and high-quality seaborne thermal coal markets, as well as the domestic U.S. thermal coal market.
The analysis by Jefferies suggests that Core Natural Resources’ valuation is split evenly between its metallurgical coal assets and its thermal coal assets. The firm emphasizes that the value of Core’s seaborne thermal coal business is predominantly in the export segment. According to Jefferies, Core’s diversified coal exposure and the inclusion of some relatively low-cost mines should lead to less cyclical cash flows compared to other pure-play coal miners. This is reflected in the company’s strong financial metrics, with a P/E ratio of 6.84 and an EV/EBITDA of 3.63, suggesting attractive valuation levels relative to earnings.
Jefferies also noted the larger scale of Core Natural Resources, including its larger market capitalization and presumed greater liquidity in its shares, which could justify a premium valuation relative to its peers over a full market cycle. Despite the premium valuation, with a 2026 estimated fully adjusted enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) of 4.0x versus the peer average of 3.1x, Jefferies sees better value in other U.S. coal companies within their coverage at this time.
The firm expects that Core’s share price would likely perform well during periods of rising coal prices. However, at the current valuation and given the market outlook, Jefferies suggests that investors may find more attractive investment opportunities in the coal sector beyond Core Natural Resources. The Hold rating indicates a neutral stance on the stock’s near-term performance potential. Notably, InvestingPro analysis suggests the stock is currently undervalued, with additional ProTips highlighting management’s aggressive share buybacks and strong historical returns. Subscribers can access more detailed analysis and 7 additional ProTips on the platform.
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