HCC

We rate WARRIOR MET COAL, INC. (HCC) as a Reduce with a composite score of 45.3/100 at a current price of $90.71. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in stability (63th percentile) and momentum (52th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (33th percentile) and value (41th percentile) tempers our overall conviction. We assign a No Moat rating (29/100), Low uncertainty, and Standard capital allocation.

Key items to watch: quarterly earnings execution and sector-level competitive dynamics. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

WARRIOR MET COAL, INC. holds a top-quartile position (#0 of 50) within the Mining sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 45.3/100 places it at rank #2754 in our full 7,333-stock universe. At $3.3B in market capitalization, WARRIOR MET COAL, INC. is a mid-cap player in the Mining space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue contraction of -17% combined with momentum at the 52th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.

The margin cascade tells an important story: gross margins of 25% (-18.6pp vs sector) narrow to operating margins of 4% (-8.5pp vs sector) and net margins of 5.8%, yielding a gross-to-net conversion rate of 23%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $90.71, WARRIOR MET COAL, INC. is trading near fair value based on current fundamentals. Our value factor score of 41/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 59.0x (a 329% premium to the sector median of 13.7x), EV/EBITDA of 92.1x (at a premium), P/B of 2.1x, P/S of 3.6x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a Low uncertainty rating to WARRIOR MET COAL, INC.. The company exhibits strong financial stability with a beta of 0.63, conservative leverage (7% D/E), and a stability factor in the 63th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

Specific risk factors that inform our assessment include: low beta of 0.63 — while defensive, this may indicate limited upside participation in bull markets; elevated valuation multiple (P/E 59.0x) that leaves limited margin for error. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 63th percentile and quality factor at the 42th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: conservative leverage (7% D/E) limits balance sheet risk; above-average stability (63th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate WARRIOR MET COAL, INC.'s capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 3.5%, and the balance sheet is managed within acceptable parameters (D/E: 7%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; WARRIOR MET COAL, INC. falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 0.50% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, WARRIOR MET COAL, INC. receives a Reduce rating with a composite score of 45.3/100 (rank #2754 of 7,333). Our quantitative framework assigns a No Moat (29/100, trend: stable), Low uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 46/100.

Our analysis does not support a constructive view on WARRIOR MET COAL, INC. at this time. The combination of limited competitive advantages, low uncertainty, and standard capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.