Arch Coal Inc.
) will release its second quarter 2013 financial results before
the market bell on Jul 30, 2013. In the prior quarter, this coal
operator reported a negative earnings surprise of 6.25%. Arch
Coal at the moment has a Zacks Rank #3 (Hold). Let's see how
things are shaping up at the company prior to this
Factors to Consider This Quarter
Arch Coal's aggressive cost containment efforts and capital
expenditure restraints will be the key highlight in the second
quarter. Its focus on low-cost operations in the Powder River
Basin and Appalachia will continue to lend constancy to margins.
In addition, rising natural gas prices contributing to increased
coal demand will add to Arch Coal's profitability.
However, the met coal oversupply in Asia compounded by the
current sluggish demand conditions in China would hurt Arch
Coal's coal exports.
The company will nevertheless gain from favorable
metallurgical coal fundamentals from the second half of 2013
fueled by the estimated 2.9% and 3.2% year-over-year growth in
global steel usage in 2013 and 2014, resepctively, as per the
World Steel Association.
Our proven model does not conclusively show that Arch Coal is
likely to beat earnings this quarter. That is because a stock
needs to have both a positive earnings Expected Surprise
Prediction or ESP (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank #1, 2 or 3 for this to happen. This is not the
Negative Zacks ESP:
Earnings ESP, which represents the difference between the Most
Accurate estimate and the Zacks Consensus Estimate, is at
Zacks Rank #3 (Hold):
Arch Coal has a Zacks Rank #3 (Hold). This combined with an ESP
of -9.38% makes surprise prediction difficult. We caution against
stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into
the earnings announcement, especially when the company is seeing
negative estimate revisions.
Other Stocks to Consider
Here are some companies indirectly related to the coal
industry which are worth considering on the basis of our model.
They have the right combination of elements to post an earnings
beat this quarter:
) has earnings ESP of +1.47% and carries a Zacks Rank #3
) has earnings ESP of +2.22% and carries a Zacks Rank #3
PNM Resources, Inc.
) has earnings ESP of +3.03% and carries a Zacks Rank #3
ARCH COAL INC (ACI): Free Stock Analysis
PNM RESOURCES (PNM): Free Stock Analysis
SOUTHERN CO (SO): Free Stock Analysis Report
WESTAR ENERGY (WR): Free Stock Analysis
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