May. 1, 2014, 3:24 PM
- Shares of Alpha Natural Resources (ANR +5.5%) and Walter Energy (WLT -4.2%) are moving in different directions as ANR beats Q1 earnings expectations and WLT falls well short.
- ANR now expects to ship 15M-18M tons of met coal this year, down from an earlier forecast of 16M-20M tons, but Sterne Agee analysts were pleased to see more industry met supply rationalization; management expects met markets to tighten in 2015 as stockpiles for all regions are now below normal.
- Cowen analysts are gloomy about WLT; with Canadian operations shutting down, the outlook comes down to operating performance at Mine No. 4/7 and maintaining liquidity until seaborne met pricing recovers.
May. 1, 2014, 7:04 AM| 2 Comments
Apr. 30, 2014, 5:30 PM
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Apr. 24, 2014, 6:25 PM
- Under Armour (UA) and Navient (NAVIV) are added to the S&P 500 index, effective April 30.
- Out of the index are SLM Corp. (SLM), which is splitting into two companies - Navient, and a consumer banking operation that will continue under the Sallie Mae brand - and Beam (BEAM), which was acquired by Suntory Holdings.
- SLM moves for now to the S&P MidCap 400, ousting Alpha Natural Resources (ANR).
Apr. 24, 2014, 3:34 PM
- Peabody Energy (BTU +2.8%) powers steadily higher, reversing early losses after CEO Gregory Boyce says during this morning's earnings call that the company is looking seriously at closing some of its met coal operations.
- Some analysts also have come to BTU's defense: Brean Capital's Lucas Pipes wrote that investors should be relieved by the company’s ability to continue to navigate the low price environment relatively well, Simmons' analysts said BTU's downside guidance was reasonable given lower benchmark met and thermal coal prices ahead, and Cowen said it would be buyers on share price weakness.
- Most other coal names also are up: ANR +3.9%, ACI -1.5%, YZC +0.2%, CLD +0.4%, WLT +0.9%, CNX +2.8%.
Apr. 22, 2014, 2:57 PM
- Coal shares are mostly lower after Arch Coal's (ACI -8.1%) big earnings miss on lower than expected margins across all regions and guidance for reduced shipments of met coal this year as prices and demand remain weak: ANR -2.7%, BTU -1.1%, CLD -3.4%, CNX -1.2%, WLT +0.9%, WLB +0.3%.
- ACI said in its earnings call that its main market for met coal demand is healthy, citing U.S. steel utilization trending above the five-year average and auto sales projected to reach nearly 16.5M units in 2014, the highest level since 2006.
- Looking for a silver lining in the Q1 results, Sterne Agee says ACI’s attention to cost control, improved thermal competitive economics with natural gas, supportive balance sheet liquidity and a continued long-term role of U.S. coal into the global markets should support a cyclical valuation turn.
- Citigroup’s Brian Yu, meanwhile, expects ANR to follow ACI and WLT in cutting met coal production.
Apr. 17, 2014, 10:39 AM
- Cloud Peak Energy (CLD -1.5%) is "a good stock in a dirty business," Barron's says in making the case for a potential 30% upside in what it sees as undervalued shares, but CLD isn't enjoying the usual Barron's bounce.
- CLD trades at a discount to its larger peers despite its clean balance sheet and improving free cash flow profile, and a rise in thermal coal prices could have a dramatic impact on profits and the stock; every $1/ton increase in the Powder River spot price adds ~$46M to CLD's EBITDA.
- Most other coal names also are lower: BTU -1.5%, CNX -0.3%, ACI +0.2%, ANR -1.3%, WLT -2.1%, WLB -0.1%.
Apr. 15, 2014, 6:45 PM
- The plunge in coal prices that has sent smaller competitors into bankruptcy is alarming bondholders in Alpha Natural Resources (ANR), as the no. 2 U.S. coal producer consumes more cash than ever, Bloomberg reports.
- ANR’s $3.43B of debt equals 37.9x EBITDA, highest among U.S. coal producers, and its bonds have lost more than 9% this year, the most among met coal producers in the Bloomberg High Yield Corporate Bond Index.
- "It’s going to get worse before it starts getting better," one analyst says. "It’s a completely oversupplied market."
Apr. 15, 2014, 2:26 PM
- The D.C. Court of Appeals upholds EPA regulations requiring power plants to limit emissions hazardous air pollutants, siding with the EPA's determination that its regulations were appropriate and necessary.
- The 2-1 court majority rejects arguments the agency should have considered the costs of its regulations before moving forward, while the dissenting judge warns the costs of the EPA regulations would amount to more than $9B/year.
- Related tickers: KOL, BTU, WLT, CNX, ACI, ANR, JRCC, YZC, PCXCQ, ARLP, NRP, PVR, PVA, OXF, CLD, WLB
Apr. 9, 2014, 12:45 PM
Apr. 9, 2014, 7:57 AM
- Yesterday's gains for coal stocks (KOL) on the back of Consol Energy's (CNX) upgraded coal outlook could be wiped out in early trading, as UBS downgrades Alpha Natural Resources (ANR), Walter Energy (WLT) and Arch Coal (ACI) to Sell from Neutral (I, II, III).
- UBS sees lower met coal price forecasts due to oversupply issues and the lower than expected Q2 benchmark settlement; the firm expects stressed balance sheets and accelerated cash burn, which could result in a 2016 liquidity crisis.
- The firm says pure-play WLT has the highest met coal leverage in its coverage, while ANR and ACI also have high EPS sensitivity to changes in the met coal price.
- Price targets are lowered to $3 from $5 for ANR, $5 from $8 for WLT, and $3 from $5 for ACI.
- ANR -3.7%, WLT -3.2%, ACI -2.7% premarket.
Apr. 8, 2014, 10:42 AM
- Consol Energy's (CNX +3.6%) upgraded coal outlook is lifting coal names higher across the board: ANR +9.2%, WLT +7.4%, ACI +5.6%, YZC +5.2%, BTU +3.8%, WLB +3.1%, OXF +3%, CLD +2%, KOL +1.9%.
- Stifel raises its CNX target price to $46 from $45, reflecting the strong market for northern Appalachian thermal coal, offsetting a weaker pricing and volume outlook for met coal (Briefing.com).
Apr. 2, 2014, 3:58 PM
- Coal stocks are higher after the head of BHP Billiiton's (BHP +0.9%) coal division said he expects world demand for coal to increase for decades to come, and that most demand growth for coal will come from outside China, which has been the primary driver of global commodity prices in recent years.
- The BHP exec also noted that coal demand in Europe is rising as nuclear plants are set to shut down and countries reduce their imports on Russian energy.
- The Market Vectors Coal ETF (KOL +0.7%) has gained 3.2% over the past week and is trading above its 200-day moving average, but the ETF is still down 4.2% YTD.
- JRCC +20.5%, OXF +4.5%, WLT +2.2%, CNX +2.1%, CLD +2%, ANR +1.9%, BTU +1.4%, YZC +0.6%, ACI -0.2%, WLB -1.2%.
Mar. 26, 2014, 10:58 AM
- UBS is the latest firm to turn negative on coal, expecting the seaborne met coal market to remain in oversupply and seeing risk to Wall Street expectations.
- Given the view of challenging met coal fundamentals and fair valuation, UBS downgrades Arch Coal (ACI -2.1%), Alpha Natural (ANR -0.2%), Peabody Energy (BTU -2.9%), Consol Energy (CNX -2.2%) and Walter Energy (WLT -4.9%) to Neutral from Buy.
- Stock target prices are cut across the board: ACI to $5 from $7, ANR to $5 from $12, BTU to $17, CNX to $42 from $48, WLT to $8 from $25.
- Cloud Peak Energy (CLD -0.5%) retains a Buy rating given a potential run in natural gas prices.
- BofA/Merrill and Jefferies have come out negative on coal in recent days.
Mar. 25, 2014, 2:38 PM
- Believing managements are too seldom congratulated for the deals they didn’t make, Jefferies offers praise to Consol Energy (CNX +1.1%) for resisting calls for years to acquire "cheap" coal producers, while downgrading Alpha Natural Resources (ANR -3.4%) for spending $7.7B three years ago for low-quality Massey Energy.
- The firm dredges up ANR's woes "not to rub salt in wounds," but because investors new to the coal sector see ANR’s chart down 90%-plus and assume it is due to the cyclical and secular headwinds of cheap gas and pending environmental rules; the very expensive acquisition of low quality assets explains much of the sector's decline.
- Meanwhile, CNX is the firm's favorite risk/reward investment in the sector and can do more in the long-term through its MLP structure to unlock value.
Mar. 25, 2014, 8:33 AM
- Arch Coal (ACI) -4.1% premarket as it and Alpha Natural Resources (ANR) are downgraded to Hold from Buy at Jefferies, which says sluggish met coal prices and the threat of another bust in gas prices are too much to merit continued recommendation of high levered ACI and ANR.
- For ACI, the firm cuts its FY 2014 EPS to a loss of $0.80 from a $0.60 loss, and lowers its stock target price to $4.75 from $8.
ANR vs. ETF Alternatives
Alpha Natural Resources Inc along with its subsidiaries is engaged in extracting, processing and marketing steam and metallurgical coal from surface and deep mines, and sells it to electric utilities, steel and coke producers, and industrial customers.
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