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“Identifying Institutional Entry & Exit Levels” Pullback Long
Consol Energy (CNX) Market Cap (Billion) $4.5 January 2017
Chart courtesy: Netdania
Medium Term Catalyst: Q4 numbers due January 31st (before the market open)
Entry: Between $18.07 (this is the pullback area), $19.51 (this is the close from yesterday) up to $19.84, (note entry area signifies a price level were institutions bought in the past) Any trade recommendations are manged by the individual investor. We do not send out email alerts for exits or stops after this report.
Note these targets are based on possible institutional selling areas, (denoted by price previously dropping from these levels in the past, and/ or based on previous trading ranges for the stock)
Shorter Term Target: $20.57 + 5% from current price
Medium Term Target: $21.61 + 11% from current price Average Volume (50-day): 3.4 million
Longer Term Target: $22.25 + 14% from current price Beta: 1.47/ Performance YTD 7.02%
Risk Management: Stop if price closes below $17.49 -10% this could indicate a trend change
- The share has been pushing higher since early January (chart above), and recent weeks has seen a compelling series of higher lows (in conjunction with bullish engulfing candles), with the probability of a further break above current levels in the short term. The MACD has also crossed to the upside, with the RSI also pushing higher from its recent lows
- From a standalone basis Consol looks attractive when viewed on a Price/ Book metric versus its own historical averages. Applying this discount to the share price could imply a target price north of $26
- On a Peer perspective CNX appears reasonable value when viewed on a Price/ Book, Price/ Cash Flow and Price / Sales comparison
- Q3 filings saw consolidated revenues (unaudited) higher by 3.4% (versus the prior year period) and Net Income coming in at $27.6 million. Tailwinds to the numbers included further reductions in debt, and increasing levels of net cash. At the time management commented; “….Our focus remains unchanged: continue to generate free cash flow and prudently allocate capital with the goal of increasing the company’s net asset value (NAV) per share over the long-term…”
Consol Energy is an integrated energy company with a focus towards shale natural gas
Latest figures – released November 1st source www.consolenergy.com
Management commentary as at latest results
At the time Nicholas J. Deluliis, President and CEO of CNX commented; “During the quarter, CONSOL continued to execute its plan and generate approximately $103 million in organic free cash flow from continuing operations…”
Operations % Change V’s Q3 2015 (Reported) Revenue +3.4% Net cash provided by operating activities + 48%
Adjusted EBITDA (-19%) EPS Details (Reported) Adjusted EPS loss of $0.15 per diluted share
As at Q3 2016 cash and cash equivalents stood at $80.2 million versus $72.6 as at December 31st 2015
Medium term: CNX management have executed well in terms of improving the company’s day-to-day operations, and this leaves it well placed for growth going forward. Below is a chart of planned capital expenditure.
Growth: An improving natural gas pricing backdrop and steady structural demand growth over the medium term should continue to act as a tailwind for the company’s bottom line.
Sector & Stock sentiment
The chart below is that of the Energy Select Sector SPDR ETF (XLE). Over the course of the past 12-months it has performed well on the back of improving prices and a cut in supply by OPEC. Broker sentiment on Consol is currently ‘outperform’ with average target prices in or around $23.
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