SunCoke Energy, Inc. (SXC) stock intrinsic value fair value estimate & owner earnings analysis

SunCoke Energy is the largest independent maker of blast furnace coke in the Americas. It owns five U.S. cokemaking plants (Middletown, Ohio; Indiana Harbor, Indiana; Granite City, Illinois; Haverhill, Ohio; Jewell, Virginia) with about 3.7 million tons of annual capacity, and operates a 1.7 million ton plant in Vitoria, Brazil for ArcelorMittal Brazil under licence and operating agreements. Most coke is sold to steelmakers (Cleveland-Cliffs, U.S. Steel) under long-term take-or-pay contracts with pass-through of coal and many operating costs, so profit depends on running the ovens reliably and on renewing contracts, not on coal prices. Since August 2025 the company also owns Phoenix Global, a provider of molten slag handling and mill services at about fifteen sites in the United States, Brazil, Slovakia and Spain, alongside its coal and coke terminals in Louisiana, West Virginia and Indiana. How we measure earnings: we start with operating cash flow, remove working-capital swings, subtract stock compensation and subtract only the maintenance portion of capital spending. Per share this gives $1.71 (2016), $1.32, $1.57, $0.94, $1.01, $1.57, $2.35 (2022), $1.42, $1.69 and $0.90 (2025). The median of both the six years 2020-2025 and the full ten years is about $1.50. That window spans a pandemic trough and the 2022 peak, and we treat it as a reference point rather than the earnings level going forward, because several named events since then lower it. What changed and why the base case sits below that median: (1) Algoma Steel notified the company at the end of the third quarter of 2025 that it was breaching its Haverhill II coke contract and would take no more coke (150 thousand tons a year, contract otherwise to December 2026); the company is pursuing recovery, but we credit nothing from that. (2) The Haverhill I plant is being closed in the first quarter of 2026 after a $90.1 million impairment. (3) The Granite City contract with U.S. Steel was extended only through December 2026, for 590 thousand tons on lower economics. (4) Debt rose to $693 million ($500 million of 4.875% notes due 2029 and $193 million drawn on the revolver due 2030) to fund the $295.8 million Phoenix acquisition, which raises interest cost. (5) About $8 million a year goes to the 14.8% minority owner of Indiana Harbor, which the cash flow figure does not net out. Against this, Phoenix contributed only five months in 2025, and 2025 carried $10.1 million of acquisition costs. Industrial Services segment adjusted EBITDA was $62.3 million in 2025 against $50.4 million in 2024. Growth check: owner earnings fell about 47% in 2025 ($0.90 versus $1.69). The base case starts at $1.10 a share, above the 2025 level, for dated reasons in the filings: acquisition costs do not recur, Phoenix is included for a full year rather than five months, and in the second quarter of 2026 revenue was $475.3 million versus $434.1 million and net income $13.1 million versus $1.9 million a year earlier. First-half 2026 operating cash flow of $45.5 million was only slightly above $43.3 million a year earlier and capital spending was higher ($32.9 million versus $17.5 million), so we do not go beyond $1.10. Base case, about $13.4 a share: earnings of $1.10 a share held flat for ten years, with no growth credited. This assumes contracts keep being renewed, which the company has done repeatedly: Haverhill II with Cleveland-Cliffs was extended to December 2028 in November 2025 and Granite City was extended in January 2026. Middletown runs to December 2032 and Indiana Harbor to September 2035. After year ten we let earnings fade by 5% a year rather than assume they last forever, since the plants (some dating to 1962) and the U.S. blast furnace customer base are aging. We credit no expansion, new products or margin recovery. Bear case, about $3.5 a share: Granite City is not renewed after December 2026, the Haverhill II contract and the Vitoria Brazil agreement (January 2028) lapse without replacement, and earnings fall to $0.90 in 2026, $0.60 in 2027 and $0.45 through 2032 while only the Middletown and Indiana Harbor contracts remain. They fall to $0.35 through 2035 and then to zero. The 2029 notes would also have to be refinanced from a smaller earnings base. Bull case, about $19.5 a share: the Granite City and Haverhill II volumes are renewed on terms like those before 2025, and with Phoenix contributing fully, earnings return to about $1.60 a share, near the past-decade median, and hold for ten years with the same 5% annual fade afterwards. Debt is not deducted from the values above because the earnings measure is already after interest paid; leverage is instead reflected in the bear case. What would make this wrong: loss of more Cleveland-Cliffs or U.S. Steel volume, a steel downturn that hits take-or-pay customers' ability to pay, higher interest costs on refinancing, or additional impairments. The Algoma dispute is unresolved and its recovery is not in any case. The most recent quarterly report on file is for the period ended June 30, 2026; we could not read its text and used its reported figures only.