Zacks.com releases the latest Analyst Interview. Today’s interview is with senior analyst Matthew Thurmond, who discusses Peabody Coal (NYSE: BTU), Arch Coal (NYSE: ACI), Consol (NYSE: CNX), Penn Virginia (NYSE: PVR) and Natural Resource Partners (NYSE: NRP).
A synopsis of today’s Analyst Interview is presented below. The full article can be read at http://at.zacks.com/?id=2678.
How has your coal coverage been performing lately?
Considering the pricing problems just mentioned, results have been poor. Peabody Coal (NYSE: BTU) reported second quarter earnings yesterday and missed consensus estimates by $0.07 per share. The company has experienced operational problems two of its key areas: the Powder River Basin and Australia. My third largest miner, Arch Coal (NYSE: ACI) reported results on Monday which fell slightly short of consensus by $0.01. Arch had its own operational problems during the quarter which led to higher operating expenses. It is notable that both Peabody and Arch have lowered full year production and EPS guidance. A portion of the production shortfall will come from voluntary cuts as the miners attempt to scale back during this period of weak demand.
Do you have a favorite Buy recommendation in the coal group?
No. Not at this point. Two of the three miners I cover are “Hold” rated: Peabody and Arch. I see continued headwinds going forward and think the stocks are fairly priced. The other miner I cover, Consol (NYSE: CNX), is rated a “Sell.” The stock has run up 30% year-to-date and I am advising investors to take profits.
Aside from miners, I cover two MLP’s in the coal sector. These are yield vehicles that are set up as partnerships and generate most of their income through royalty fees charged to miners. Currently, I have a “Hold” on Penn Virginia (NYSE: PVR) and a “Sell” on Natural Resource Partners (NYSE: NRP). Natural Resource Partners is another case where there has been a big move so far this year and I advise investors to wait for better pricing.
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