On Jul 2, Zacks Investment Research upgraded
Alliance Resource Partners LP
) to a Zacks Rank #1 (Strong Buy).
ARCH COAL INC (ACI): Free Stock Analysis
ALLIANCE RES (ARLP): Free Stock Analysis
PEABODY ENERGY (BTU): Free Stock Analysis
HALLADOR ENERGY (HNRG): Free Stock Analysis
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Why the Upgrade?
The coal producer delivered positive earnings surprises in three
out of the last four quarters with an average beat of 20.4%. The
long-term earnings growth is presently pegged at 6.00%.
The partnership was able to register an impressive 24.1% increase
in sales volume in the first quarter. In addition, sales price
per ton also improved marginally from the prior-year
quarter. These factors have helped the partnership to
clinch an earnings surprise in the last reported quarter.
Alliance Resource Partners is expected to keep this positive
momentum going with its marketing team securing an order for 2
million tons through 2016. Moreover, power generation from coal
has increased from the 2012 level, primarily due to favorable
weather patterns and a recovery in natural gas prices.
The solid performance also allowed the management of Alliance
Resource Partners to increase its quarterly cash distribution
rate. In May 2013, the partnership paid $1.13 per unit, which
reflected a 10.2% increase from the year-ago quarter and a 2.0%
The partnership is expected to invest in the range of $370
million to $400 million in 2013. The partnership will acquire new
coal reserves, develop its existing mines and ensure proper
maintenance of its existing mines. These initiatives will help
the partnership to produce extra tons cost effectively, thereby
The Zacks Consensus Estimate for 2013 increased 2.3% in the last
60 days to $6.30 per share. The long-term earnings growth rate is
presently pegged at 6.00%.
The large coal producers like
) among others have trimmed their capital expenditure and
production to offset the decline in demand of coal. Having said
that, the increase in natural gas prices and improvement in
global steel consumption could help the coal behemoths to regain
Besides Alliance Resource Partners,
Hallador Energy Company
) has a favorable Zacks Rank #2 (Buy).