Shares in the S&P/ASX 200 Index (ASX: XJO) stock New Hope Corporation Ltd (ASX: NHC) have fallen significantly since October 2023. Down more than 28% over that period, is the ASX 200 stock a smart, unloved buy?
Some investors may not buy into this company because it's an ASX coal share.
For others interested in New Hope's prospects ahead of its half-year result announcement next Tuesday (19 March), let's look at whether now is a good time to invest.
Operational performance
The last major update we heard from the ASX 200 stock was its quarterly activities report for the three months to 31 January 2024. Performance and profitability are key for the ASX 200 stock.
New Hope advised it produced underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $179.9 million for the quarter, down 26.5% on the previous quarter primarily due to "realised pricing". In other words, the coal price has been falling.
The FY24 first-half underlying EBITDA of $424.8 million was 59.1% lower compared to HY23's figure of $1.04 billion.
The miner achieved an average realised sales price of A$180.64 per tonne for the quarter, compared to A$211.40 in the three months to October 2023.
It reported total saleable coal production was 2mt for the three months to January 2024, the same as the previous quarter. HY24 saleable coal production of 4.1mt was up 29.4% year over year.
The ASX 200 stock also revealed it generated an operating cash flow of $130.6 million for the first half, and it ended with available cash of $480.4 million after paying its dividends and FY23 income tax liability.
New Hope also recently took part in a capital raising in Malabar Resources. This increased its ownership to 19.9% of the business.
Is the ASX 200 stock a buy?
The fall of the New Hope share price has been accompanied by (or caused by) a drop in the coal price. Its profitability has decreased, which may justify the decline.
Analysts and brokers don't seem to think it's a buy. According to Factset, there are four hold ratings and two sell ratings on the business. However, the miner is still valued at a very low price/earnings (P/E) ratio.
According to Commsec, the New Hope share price is valued at 8x FY24's estimated earnings and FY25's estimated earnings. It's projected to pay a grossed-up dividend yield of 10.5% in FY24 and FY25.
Even so, there may be plenty of other ASX shares that could be a more rewarding investment.
