On Friday, Benchmark lowered its price target of Ramaco Resources Inc . (NASDAQ: NASDAQ:METC) shares to $20.00, down from the previous target of $24.00, while keeping a Buy rating on the stock.
The adjustment follows Ramaco Resources' report of first-quarter adjusted EBITDA at $24 million, which fell short of the $39 million market consensus.
The company faced a challenging beginning to the year, with over half of its export shipments taking place in March when price indices were at their lowest. This timing significantly affected the realized price per ton.
Additionally, the company encountered geological and labor issues, resulting in a cost per ton that exceeded the full-year guidance of $105-$111.
Despite these setbacks, there is an expectation of potential improvements in the second half of the year. Ramaco Resources is projected to add approximately 1 million tons of annualized production, with anticipated costs per ton in the range of $90-$95.
The Maben preparation plant is also on track to commence operations before the end of the year, which is predicted to save around $40 per ton in trucking costs.
The company anticipates that, combined with other productivity gains, it will be able to reduce its cost per ton to $100 or below by the end of 2024. Management has noted that the idling of some high-cost mines has ameliorated the labor situation and could contribute to a tighter supply in the upcoming quarters.
InvestingPro Insights
Amidst the challenges faced by Ramaco Resources Inc. (NASDAQ: METC), the InvestingPro platform offers a few rays of hope for investors. Notably, the company's high shareholder yield and strong free cash flow yield are points of attraction. These factors suggest that Ramaco Resources may be well-positioned to generate value for its shareholders over time. Additionally, the stock's recent dip into oversold territory, according to the RSI, could indicate a potential buying opportunity for those who believe in the company's fundamentals and long-term prospects.
The real-time data from InvestingPro further enriches our understanding of the company's financial health. With a market capitalization of $691.61M and a P/E ratio of 12.29, Ramaco Resources is positioned at a valuation that could be compelling to investors, especially when considering its revenue growth of 21.25% over the last twelve months as of Q1 2024. Moreover, the company's dividend yield stands at a robust 4.14%, supported by a dividend growth of 21.36%, which may appeal to income-focused investors.
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