Yesterday, 12:41 PM
- Peabody Energy (BTU -8.9%) and Cloud Peak Energy (CLD -1.6%) give back some of yesterday's gains, as Morgan Stanley says coal prices could remain weak for a few more years and forecasts U.S. utility coal burn to fall by 75 metric tons Y/Y to 774 metric tons in 2015 and remain near that level until 2020.
- The firm downgrades BTU and CLD to Equal Weight from Overweight, saying both companies need an uptick in coal pricing to remain or return to free cash flow positive.
- Also: ACI -12.2%, WLB -1.4%, CNX +4.4%, ARLP +2.6%.
- Earlier: Things can't get much worse for coal after disastrous 2015, analyst says (Oct. 6)
Tue, Oct. 6, 7:11 PM
- Most utilities that are able to switch to cleaner burning and cheaper natural gas already have done so, BB&T Capital said in a new report that may have helped propel coal company stocks (NYSEARCA:KOL) to big gains today.
- Newly implemented federal regulations prompted closures of several coal-fired power plants in 2015, and natural gas prices that have dropped 37% in the past year made that fuel more attractive than coal for electricity generation.
- "The good news is that we can’t even fathom a fall in coal demand in 2016 that resembles anything like what happened in 2015,” BB&T's Mark Levin writes.
- The worst case for coal next year is for demand to slide another 2%-4% rather than the 10% drop suffered in 2015, according to Levin, but Bloomberg analysts warn that coal producers may want to brace themselves as the flood of cheap gas flowing into power plants shows no signs of receding.
- In today's trade: BTU +34.9%, ACI +33.3%, CLD +6.6%, ARLP +3.1%, CNX +1%, WLB -0.5%.
Thu, Oct. 1, 12:34 PM
- Coal stocks (KOL -0.7%) are broadly lower after Moody's issues a weak forecast for the North American coal industry, saying the outlook "remains negative amid ongoing challenges for both metallurgical and thermal coal, including declining coal consumption and low met coal prices."
- The ratings agency forecasts a ~10% Y/Y decline in the industry's EBITDA for 2016, following the 25% drop it anticipates for 2015.
- BTU -10.7% after allowing for a 1-for-15 reverse split that took effect today; also ACI -5.4%, CNX -6.4%, WLB -5.1%, CLD -3%, ARLP -0.7%.
Sat, Sep. 19, 8:25 AM
- Metal and mining stocks have been hit hard in recent months, but analysts at FBR Capital argue that there are still attractive names to own in the sector.
- Companies with exposure to the zinc and met coal markets look appealing, FBR says, as supply reductions could act as a positive catalyst for prices; Teck Resources (NYSE:TCK) is the firm's top pick there, with Horsehead Holding (NASDAQ:ZINC) the favorite small-cap idea.
- The firm sees "no structural turnaround for domestic thermal coal," but thinks the rate of decline will begin to slow next year, justifying Outperform ratings on Alliance Resource Partners (NASDAQ:ARLP) and Westmoreland Coal (NASDAQ:WLB); Cloud Peak Energy (NYSE:CLD) and Joy Global (NYSE:JOY) are rated Underperform.
- FBR is fairly upbeat on steel names, initiating SunCoke Energy (NYSE:SXC) and SunCoke Partners (NYSE:SXCP) at Outperform, as SunCoke’s long-lived coke assets are able to generate strong margins “in almost any U.S. steel environment"; Cliffs Natural Resources (NYSE:CLF) is rated Market Perform.
- The copper market will remain in surplus through 2017, FBR says, but it rates Southern Copper (NYSE:SCCO) at Outperform; Freeport McMoRan (NYSE:FCX) is rated Market Perform.
- Among precious metals miners, the firm prefers Pan American Silver (NASDAQ:PAAS) and Royal Gold (NASDAQ:RGLD), the latter "a diversified company with a solid balance sheet and attractive acquisition opportunities."
Wed, Sep. 2, 3:23 PM
- Volatility in U.S. coal equities (NYSEARCA:KOL) has reached the highest level since March 2010, as miners that fell more than 90% jumped to a two-week rally that abruptly ended yesterday when they slid as part of the stock market's wider selloff.
- Short sellers are a big factor: Last week's bounce suggests short sellers were fleeing their positions, which pushed up prices - Peabody Energy (BTU -3.6%), for example, had averaged ~15M trades/day for a month before Thursday, when it totaled nearly 60M.
- The companies also are trying to restructure their debt: After reports said Arch Coal (ACI +6.8%) was looking to compromise with lenders opposed to its proposed debt swap, and thus stave off the threat of bankruptcy, shares soared 633% in nine trading days.
- But Bloomberg says ACI is having trouble completing the swap, with senior lenders still opposed, and bond traders do not think the deal would be enough to fend off a bankruptcy.
- Also: CLD +1.3%, WLB +3%, ARLP -2.2%.
Tue, Sep. 1, 3:39 PM
- Coal stocks (KOL -4.4%) are surrendering large chunks of their recent gains, as might be expected, but J.P. Morgan analysts think coal's share of the U.S. power market might have hit its low point, seeing grid inflexibility making a reduction in coal’s share below ~30% difficult without more investment in the grid, pipelines and more gas power plants.
- The JPM team thinks it is reasonable to assume that once the U.S. gas market begins to balance and the gas price picks up, coal’s market share will recover to the mid or even high 30s prior to the introduction of the greenhouse gas rule, assuming the rule overcomes its many legal challenges.
- Meanwhile, the firm cuts its 2016 EPS estimate on Alliance Resource Partners (ARLP -1.7%) to $0.83 from $0.89, and imitates a 2016 estimate on Peabody Energy (BTU -17.98%) for a loss of $0.37, Arch Coal (ACI -28.9%) for a loss of $6.78, and Cloud Peak Energy (CLD -22.1%) for a loss of $0.21.
Fri, Jul. 31, 6:16 PM
- Alliance Resource Partners (ARLP -1.7%) says it's completed acquiring the rest of the White Oak Resources equity interests that it didn't already own, and has updated production and financial guidance accordingly.
- The move means an Alliance unit takes operating control of White Oak Mine No. 1 in Illinois, producing 6M tons/year of high-sulfur coal.
- The company now guides to coal production of 42.8M-43.5M tons for the year, and sales volumes of 42.7M-43.8M tons.
- It also sees 2015 revenues (excluding transportation) of $2.37B-$2.41B -- above consensus of $2.36B -- and full-year EBITDA of $765M-$795M (in line) and net income of $405M-$435M.
- Alliance paid $50M at closing and may owe contingent consideration in the future. The company will hold a conference call to talk about the guidance on Monday at 11 a.m. ET.
Tue, Jul. 28, 7:25 AM
Tue, Jul. 28, 7:09 AM
Mon, Jul. 27, 5:30 PM
- AGCO, AHGP, AIXG, AKS, ALLY, AMG, ARG, ARLP, ARW, AUDC, AUO, AXE, BP, BTU, CIT, CMI, CNC, CNX, COMM, CPLA, CRY, CVLT, CYNO, DD, DHI, DHX, ECL, F, FBC, FCH, FDP, FMER, FSS, GLW, GPN, GRUB, ICLR, IPGP, IPI, IR, JBLU, JEC, KEM, LH, LPT, LYB, MAS, MMC, MRK, MZOR, NCI, NLSN, NOV, NTLS, OAK, OFC, PCAR, PCH, PCP, PFE, POR, RAI, RDWR, SALT, SIR, SIRI, ST, SVU, TXT, UPS, UTHR, WAT, WDR, WYN
Wed, Jul. 22, 11:34 AM
- J.P. Morgan finally gets around to downgrading Peabody Energy (BTU +11.7%), cutting its rating to Neutral from Overweight, two days after shares hit a 52-week low.
- After Arch Coal ([ACI]] +1.1%) and Alpha Natural’s (ANR +8.1%) share prices fell below $1, the spotlight fell on BTU, the firm explains, adding that the stock is vulnerable to squeezes, as 36% of BTU equity is now shorted; but in view of the firm's cautious commodity view on natural gas into year's end, it says it is "uncomfortable" with its Overweight rating on BTU.
- JPM says its coal Overweights are now restricted to Alliance Resource Partners (ARLP -1.9%) and Foresight Energy (FELP +2.1%).
Tue, Jul. 14, 3:43 PM
- Challenging results should be expected across the spectrum of coal producers, including Peabody Energy (BTU -3.3%), Cloud Peak Energy (CLD -1.5%), Alpha Natural Resources (ANR +0.6%) and Arch Coal (ACI +5.1%), Cowen analysts maintain, seeing average Q2 EBITDA estimates for the group ~4% below consensus.
- Among the coal names, Cowen says it is farthest below consensus for ACI (13% below consensus) and ANR (27% below consensus); amid deteriorating financial conditions, self-bonding capacity has become a hot topic for these companies and will be at the forefront of Q2 earnings calls.
- Cowen considers Alliance Resource Partners (ARLP +0.2%) its top pick and believes the company's White Oak transaction solidifies distribution growth potential; the firm rates ARLP, ACI and Foresight Energy (FELP -2.3%) at Outperform, and Natural Resource Partners (NRP -1.3%) and Teck Resources (TCK -0.2%) at Market Perform.
Thu, Jul. 9, 5:56 PM
- J.P. Morgan's John Bridges sees “no near term positive catalysts" for beaten-down coal stocks such as Peabody Energy (NYSE:BTU), Alliance Resource Partners (NASDAQ:ARLP), Foresight Energy (NYSE:FELP) and Cloud Peak Energy (NYSE:CLD).
- The analyst notes that BTU has announced that it has overcome requests from Wyoming over self bonding of reclamation liabilities, but both Arch Coal (NYSE:ACI) and Alpha Natural Resources (NYSE:ANR) remain under review; BTU, ACI and ANR "appear to have ~24 months before the risk of a 'maturity wall' of expiring debt though equity values may imply some thoughts about proactive filing."
- Bridges lowers its stock price targets for BTU to $5 from $7, ARLP to $33 from $40, and FELP to $17 from $18, and CLD to $6.50 from $7.
Tue, Jun. 30, 11:25 AM
- Coal companies (KOL -0.8%) are surrendering much of the gains they enjoyed following yesterday's Supreme Court decision against the EPA's mercury emissions regulations, as the initial reaction may prove rosier than the actual benefit to the coal industry.
- The consensus is that the ruling might force the EPA to be less aggressive about its efforts to cut pollution but will not help coal overcome competition from gas and alternative energy; also, the oversupply of natural gas likely will continue to depress the price of gas and reduce coal sales.
- The ruling could prove too late to provide a reprieve for most of the utilities that already had spent the resources to retrofit or retire, Sterne Agee analysts say, but lower MATS compliance operating costs could help some PRB coal power plants compete more aggressively on the margin with gas-fired power plants.
- Citigroup notes the news has important implications for the Clean Power Plan proposal scheduled to be finalized mid-summer 2015, and views the ruling as a net positive for the U.S. thermal coal market and miners such as Peabody Energy (BTU -11.3%), Alliance Resource Partners (ARLP +1.5%),Alliance Holdings (AHGP -0.1%) and Foresight Energy (FELP +0.1%).
- Also: ACI -4.7%, ANR -6.9%, CLD -7%, WLB -2.9%, WLT -12.9%.
Tue, Apr. 28, 6:06 PM
Tue, Apr. 28, 6:03 PM
ARLP vs. ETF Alternatives
Alliance Resource Partners LPis a diversified producer and marketer of coal to United States utilities and industrial users. It operates ten underground mining complexes in Illinois, Indiana, Kentucky, Maryland and West Virginia.
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