On Oct 8, 2013, Zacks Investment Research upgraded
Hallador Energy Company
) to a Zacks Rank #1 (Strong Buy).
HALLADOR ENERGY (HNRG): Free Stock Analysis
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Why the Upgrade?
Hallador Energy generated positive earnings surprise in 3 out of
the last 4 quarters, with an earnings beat of 35.7%. In the
second quarter of 2013, the company reported earnings of 28 cents
per share, beating the Zacks Consensus Estimate by 10 cents.
Quarterly earnings increased 21.7% year over year due to an
improvement in the company's top line on the back of a rise in
coal sales, and a decline in the cost of coal exploration.
Hallador Energy was primarily engaged in the production of oil
and gas. However, it had entered into a 50:50 joint venture with
Sunrise Coal, LLC in 2006. The company has in recent times been
steadily diversifying into the coal business. This
diversification would add to Hallador Energy's profits and boost
As of Jun 30, 2013, Hallador Energy had a cash balance of $14.8
million and $165 million available under the senior secured
revolving credit facility. During the first six months of 2013,
the company's cash generation from operating activities was $13
A stable liquidity position along with a steady cash generation
capacity encourage the company to increase its capital spending
by more than 2.5 times from the year-ago level to $14.8 million
in the first half of 2013.
Hallador Energy has purchased a multi-commodity truck/barge
terminal, Ohio River Terminal, for $2.8 million. The Ohio River
Terminal is close to a few railroads, dock and a power generation
plant. The company intends to utilize this terminal to ship its
coal, thereby reducing transportation costs.
As per an Energy Information Administration report, total coal
consumption will increase in the near term primarily due to
strong demand for electricity generation and volatility in
natural gas prices. It is a positive sign for Hallador Energy, as
the company is primarily engaged in the production and sale of
We note that the company is paying special cash dividends from
Jul 2010. Further, the board of directors has approved that it
will distribute 4 cents per share as a regular quarterly cash
dividend to shareholders from Apr 2013. This initiative will help
Hallador Energy to attract more investors and maximize
Other Stocks to Consider
Besides Hallador Energy, other stocks in the coal industry that
are presently performing well include
James River Coal Co.
SunCoke Energy Inc.
SunCoke Energy Partners, L.P.
), each with a Zacks Rank #2 (Buy).