Why did the Whitehaven Coal (ASX:WHC) share price surge 20% in February?

The month just been was a good one for the coal miner. We take a closer look.

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Key points
  • The Whitehaven Coal share price gained 20% last month
  • Thermal coal prices have been on the rise due to supply issues 
  • Goldman Sachs lifted the company's share price target to $3.90 in February 

The Whitehaven Coal Ltd (ASX: WHC) share price has just enjoyed a stellar month.

Whitehaven shares surged nearly 20% between market close on 31 January and 28 February. And it seems the good run is continuing into March, with the coal miner's shares currently up 5.92% today at $3.40.

Let's take a look at why investors might be interested in this share.

Five happy miners standing next to each other representing ASX coal mining shares which some brokers say could pay big dividends this year

Image source: Getty Images

What happened to Whitehaven in February?

The Whitehaven Coal share price climbed steadily in February, with only a few minor dips. Rising coal prices and positive broker outlook may have helped the company's shares.

Analysts responded well to Whitehaven's financial results in February. As my Foolish colleague James reported, Goldman Sachs lifted its price target on the company's shares to $3.90.

The company's shares climbed nearly 4% on February 18 on the back of this news.

Goldman described Whitehaven as a "compelling de-gearing and capital returns story". Analysts also highlighted the positive thermal coal price outlook due to supply issues in Indonesia, Australia, and Russia.

Whitehaven reported a 1,601% surge in earnings before interest, taxes, depreciation, and amortisation (EBITDA) to a record of $632 million in its H1 FY22 results on 17 February. Revenue also surged 106%, while net profit after tax soared 460%. The Whitehaven Coal share price fell on the day the results were released. However, it rebounded strongly the following day.

Commenting on the results, CEO and managing director Paul Flynn said:

High prices for thermal coal have driven record half year earnings and cash flows.

In a world where access to reliable and affordable energy is more important than ever, our investment thesis is a compelling one.

The surging coal price has also likely impacted investor sentiment in Whitehaven. Between market close on 31 January and 28 February, the thermal coal price soared 23% from US$222.75 to US$274.50 per tonne.

Whitehaven Coal share price snapshot

The Whitehaven Coal share price has exploded 116% in the past year. This year to date, Whitehaven shares have soared 29%.

For perspective, the benchmark S&P/ASX 200 Index (ASX: XJO) has returned around 5% over the past year.

Whitehaven has a market capitalisation of about $3.3 billion, based on its current share price.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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