The Whitehaven Coal Ltd (ASX: WHC) share price has been travelling higher over the past few months. This comes as the coal miner has enjoyed strong prices for its thermal and metallurgical coal.
However, at Monday's market close, Whitehaven shares finished the day down 3.78% to $2.29. It appears investors decided to take profit after the company's share price reached a 52-week high of $2.43 last Thursday.
Let's take a look at how the Whitehaven share price tracked during the company's last earnings season.
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What happened in the first half of FY21?
In mid-February 2021, Whitehaven delivered its half-year results to the ASX, reporting a disappointing performance for the 6 months.
Here's a quick recap of the highlights mentioned in the H1 FY21 report:
- Revenue fell 21% to $699.3 million over the prior corresponding period (H1 FY20 $885.1 million);
- Earnings before interest, taxes, depreciation and amortisation (EBITDA) declined 79% to $37.2 million (H1 FY20 $177.3 million);
- Net loss after tax of $94.5 million (H1 FY20 net profit after tax $27.4 million); and
- No interim dividend declared due to the adverse impact of the significant contraction in coal prices.
As a whole, investors appeared to be unfazed by the company's H1 FY21 result, sending Whitehaven shares from $1.585 on 17 February to $1.85 in the weeks following.
However, the Whitehaven share price rise was short-lived, plummeting to as low as $1.152 on 12 May. This came amid the company's revised FY21 guidance to the market.
What should investors look out for this earnings season?
Whitehaven is expected to report its full-year results on 26 August with investors most likely wondering what to expect.
According to Goldman Sachs, its team of analysts are predicting Whitehaven to surprise the market for its FY21 financial result.
- Total revenue is estimated to stand at approximately $1,580 million, which is 8.5% below FY20's $1,725 million.
- Underlying EBITDA is forecasted to be $201 million, down 34.3% from the prior corresponding period ($306 million).
- No final dividend to be declared, however this is assumed to be reinstated in February 2022.
Although this may seem negative, Goldman Sachs is stating Whitehaven is set up for bumper performance by December 2021. It remains to be seen what affect the performance will have on the Whitehaven share price.
The company is forecasting to half its net debt to $300 million by December 2021 following management's stringent cost controls. In addition, free cash flow is expected to generate more than $500 million from realised coal prices.
But the market will likely be most focused on commentary around the impacts of current COVID-19 lockdowns.
As such, Goldman Sachs is confident on Whitehaven, slapping a "buy" rating with a 12-month price target of $2.60. This implies an upside of around 13.5% based on the current share price.
Whitehaven share price snapshot
In 2021, the Whitehaven share price has gained around 40%, reaching pre-pandemic levels. Although, when looking at the longer term, the company's shares are roughly 60% down from its July 2018 highs of $5.90 apiece.
Whitehaven commands a market capitalisation of around $2.38 billion, making it the 177th largest company on the ASX.
