Arch reported adjusted diluted EPS for the quarter of $0.29, compared with a consensus estimate of $0.32. Eliminating the adjustments, diluted EPS came in at $0.33. Quarterly revenue also fell a bit short at $1.23 billion compared with estimates of $1.3 billion.

The company’s CEO said that Arch is reducing its production volumes in 2012 “to better align with weak generation and coal demand trends.” Here’s what the company had to say about conditions in 2011 and its outlook for 2012:

Coal markets weakened in the fourth quarter of 2011 as abnormally mild weather and muted economic growth caused U.S. power generation to decline slightly for the full year. Domestic coal consumption declined 5 percent in 2011, resulting from the decrease in power generation as well as fuel switching by power producers given decade-low prices for natural gas and abnormally high hydroelectric availability. As a result, coal stockpiles at U.S. generators rose to an estimated 180 million tons by year end, a seasonal build that is above historical norms.

In 2012, Arch currently estimates that domestic coal consumption for power generation could decline by 50 million tons or more from 2011 levels, as mild weather has reduced power demand and the current oversupply in natural gas markets could induce more coal displacement. Given anticipated declines in domestic coal use as well as U.S. generator stockpile builds, Arch believes that coal production and capital spending levels industry-wide are in the process of significant rationalization, which should set the stage for the next market upswing.

Arch shares are down nearly -4.5% in pre-market trading at $15.58 in a 52-week range of $13.09-$36.99.

Paul Ausick

Demand for coal, both the thermal variety used for generating electricity and the metallurgical coal used in steel making, declined in 2011 as coal-fired plants have been shut down in favor of gas-fired plants and demand for steel has dropped.

In the US, gas-fired plants account for about 39% of total generation capacity, but these plants have traditionally been used to meet demand spikes because natural gas was more expensive than coal. With gas prices so low (about $2.49/thousand cubic feet today), coal miners have to lower prices or reduce production or both.

A quick look at coal mining companies’ valuations is enlightening.

Alpha’s share price at around noon today is $23.19 in a 52-week range of $15.49-$61.66. The consensus target price on the stock is $29.50, for a potential upside of 27%.

Patriot’s share price is $9.19 in a 52-week range of $6.92-$27.56. The consensus price target on the stock is $11.50, for a potential upside of 25%.

Peabody’s share price is $38.38 in a 52-week range of $30.60-$73.95. The consensus price target for the stock is $49, for a potential gain of about 28%.

Consol’s share price today is $37.34 in a 52-week range of $30.56-$56.32. The consensus price target is $50, for a potential upside of 34%.

Arch Coal’s share price is $15.39 in a 52-week range of $13.09-$36.99. The consensus price target is $22, for a potential upside of about 43%.

Market Vectors Coal ETF (NYSE: KOL) is down 0.4% at $37.17 and is 52-week trading range is $27.42 to $51.87.

Share price highs for all the coal miners is down by -24% to -64%, with Consol down the least and Patriot down the most. Our pick from among these would have to be Peabody, primarily for its strength overseas. The others are either closing shafts or soon will be.

The boom in shale gas production not only weighs down natural gas prices, but will continue to weigh on coal prices. About the only thing that can help here, is lower natural gas production, and that may be starting to happen.

Paul Ausick

Patriot Coal officials said demand for met coal has weakened in the last few weeks, especially export demand. Demand from China, the world’s largest importer of met coal, is expected to remain weak through the first half of the year, although demand is expected to rise in the second half as Chinese and European economies begin to grow again. Total consumption of met coal could fall by 13 million metric tons in 2012.

In the late morning, Patriot Coal shares are down more than -9% at $8.18 in a 52-week range of $6.92-$29.20.

Shares in Alpha are down nearly -8% at $20.76 in a 52-week range of $15.49-$62.65.

James River shares are down more than -8% at $6.77 in a 52-week range of $5.41-$25.59.

Steel maker Arcelor Mittal is down nearly -2%, while US Steel and AK Steel are both down about -3%.

Paul Ausick

S&P’s threat of a downgrade of eurozone nations puts huge pressure on the region’s leaders. (Reuters)

An independent panel that reviewed the financial activity of Olympus suggests legal action be taken. (Reuters)

An MIT report says the U.S. power grid is vulnerable to cyber attacks. (Reuters)

BP (NYSE: BP) says high oil prices could hurt global growth. (Reuters)

Samsung announces a new flash memory chip operation in China to cost as much as $4 billion. (Reuters)

John Corzine ignored warnings about his firm’s risky trades, some of which were given to his board by management. (WSJ)

Merkel and Sarkozy will support changes in the euro area treaty that would hold nations more closely to their budgets. (WSJ)

Ford (NYSE: F) begins to search for a CEO as Alan Mulally plans to leave within two years. (WSJ)

AMR (NYSE: AMR) likely will make deep expense cuts so it can exit Chapter 11. (WSJ)

Kraft Foods (NYSE: KFT) announces who will manage the two divisions into which the company will be broken. (WSJ)

Clearwire (NASDAQ: CLWR) will try to raise $300 million. (WSJ)

California Governor Jerry Brown will try to get a tax on high-income residents to cover the costs of education. (WSJ)

Alpha Natural Resources (NYSE: ANR) will pay fines to cover a mining disaster that happened before it owned the operator of the mine involved — Massey. (WSJ)

BP says Halliburton (NYSE: HAL) destroyed evidence about the Deepwater Horizon disaster. (WSJ)

A leading Greek politician says his country’s recession will last through 2013. (WSJ)

Viacom (NYSE: VIA) expects strong ad growth in the near term. (WSJ)

ConocoPhillips (NYSE: COP) says that two agencies approved its drilling in the Alaska’s National Petroleum Reserve. (WSJ)

Eastman Kodak (NYSE: EK) changes some of its advisers as it tries to avoid Chapter 11. (WSJ)

Norway’s sovereign-wealth fund pushes to replace board members at some U.S. firms it owns. (WSJ)

Debate over whether Walmart (NYSE: WMT) will hurt local merchants in India has caused deep rifts in a government that may let large retailers own stores in the country. (NYT)

An antitrust hearing will check issues with the Express Scripts (NASDAQ: ESRX) and Medco Health Solutions (NYSE: MHS) merger. (NYT)

Edgar M. Bronfman Jr. departs as chairman of Warner Music Group (NYSE: WMG). (NYT)

Dubai may refinance $10 billion in state debt. (FT)

Douglas A. McIntyre

Janus Capital Group, Inc. (NYSE: JNS) fell -49.4%, from $12.97 to $6.56. The consensus price target is $7.00. Janus has struggled with high redemptions so far this year and the company’s assets under management could fall further by the end of the year.

Hudson City Bancorp, Inc. (NASDAQ: HCBK) fell -50.9%, from $12.74 to $6.25. The consensus price target is $6.50. Hudson’s mortgage business has been beaten up by low mortgage interest rates, which currently show now signs of rising significantly.

Genworth Financial Inc. (NYSE: GNW) fell -51.4%, from $13.14 to $6.38. The consensus price target is $8.50. Genworth, an insurance company, has suffered from mortgage insurance woes, as the risk of default on the company’s insured loans rises.

Netflix, Inc. (NASDAQ: NFLX) fell -53.3%, from $175.70 to $82.08. The consensus price target is $185.00. This stock was our worst performer in the month of October, but its decline started in July.

United States Steel Corp. (NYSE: X) fell -56.6%, from $58.42 to #25.36. The consensus price target is $35.00. Like other steelmakers, US steel has struggled with reduced construction and lower levels of automobile manufacturing. The outlook continues weak.

American International Group, Inc. (NYSE: AIG) fell -57.2%, from $57.62 to $24.69. The consensus price target is $29.00. AIG continues to feel the weight of its majority ownership by the federal government and its rising cost of capital.

Cablevision Systems Corp. (NYSE: CVC) fell -57.2%, from $33.84 to $14.47. The consensus price target is $22.00. This was another of our biggest October losers.

Alpha Natural Resources, Inc. (NYSE: ANR) fell -60%, from $60.03 to $24.04. The consensus price target is $35.50. Alpha’s $8.5 billion purchase of Massey Energy came at a high point in the coal business, which has since seen asset values fall. Alpha’s overhang on litigation from an explosion at a Massey mine that killed 29 miners.

Monster Worldwide Inc. (NYSE: MWW) fell -60.9%, from $23.63 to $9.23. The consensus price target is $15.00. Monster has suffered from high US unemployment as employers have not been looking to hire new employees.

First Solar Inc. (NASDAQ: FSLR) fell -61.8%, from $130.14 to $49.77. The consensus price target is $100.00. First Solar was the second-worst performer in our list of the worst stocks in the month of October.

Paul Ausick

Met coal currently commands a contract price of about $285/metric ton. The spot price for Australian met coal is around $250/metric ton, a -20% drop in just three months. That indicates that the contract price will fall as well, and probably below the spot price. Platt’s has quoted a broker who has projected prices of $235/metric ton in the first quarter of 2012, falling to $205/metric ton by the end of the year.

The lower pricing is the result of an anticipated slowdown in the global economy, particularly in China which has experienced a construction boom in the past few years. But tighter government restrictions on lending and an over-supply of vacant buildings have resulted in fewer construction projects.

Still, there remains speculation that other coal companies may be takeover targets. We noted a rumor in early September that British miner Anglo American PLC (OTC: AAUKY) may be preparing a bid for Walter Energy. Last week, BHP Billiton plc (NYSE: BHP) was said to be considering a $6 billion offer for Walter Energy, with Brazilian giant Vale SA (NYSE: VALE) also included in the mix.

Like many commodities stocks, Walter Energy’s share price plunge in early August, and posted a 52-week low of $57.62. Shares have recovered to over $75, but that’s still about 50% off the stock’s 52-week high. If a takeover offer is coming, now is probably a good time.

US miner Patriot Coal Corp. (NYSE: PCX) has been boosting its production of met coal, and the company has said it sees strong demand for the steel-making coal continuing from Brazil and India. Patriot’s share price is about 67% below its 52-week high, making it another possible takeover target now that it’s market cap has fallen below $1 billion.

Peabody’s shares were up more than 3% at this morning’s opening, at $39.39, in a 52-week range of $30.60-$73.95. ArcelorMittal’s shares were also up more than 3%, at $18.72, in a 52-week range of $14.77-$38.88. The Market Vectors Coal ETF (NYSE: KOL) is unchanged, at $35.14, in a 52-week range of $27.42-$51.87.

The elephant in the room that no one wants to acknowledge is that if the stronger coal players are using the recent weakness to acquire the weaker players, perhaps these companies are positioning themselves better for the next decade and beyond.  Coal demand is a often considered as a leading indicator because it is still used as a key measurement for power consumption and for building infrastructure equipment and structures.  As with many businesses in and around commodities, getting better scale and better geography can incrementally lower costs and that drives higher margins.   Coal players seem to be positioning themselves for far beyond the next few years.

Paul Ausick

In addition to its struggles with a weak economy, the coal industry is almost continuously fighting rear-guard battles against environmentalists and regulators. The industry, or at least some of its players, have earned the scrutiny following deadly mine explosions and for continuing the widely denounced mining practice known as mountaintop removal. The US Environmental Protection Agency tried to rein in mountaintop removal mining by invoking provisions in the Clean Water Act. In a court ruling yesterday, the industry won a victory over the EPA when the judge ruled that the agency had exceeded its enforcement authority by failing to go through the formal rulemaking process before promulgating the restrictions on mountaintop removal.

The suit was filed by the National Mining Association, an mining industry group that includes large coal miners like Arch Coal Inc. (NYSE: ACI), Alpha Natural Resources Inc. (NYSE: ANR), Peabody Energy Corp. (NYSE: BTU), Cliffs Natural Resources Inc. (NYSE: CLF), Consol Energy Inc. (NYSE: CNX), and Patriot Coal Corp. (NYSE: PCX). The court ruling is expected to remove restrictions on more than 70 mining permits that were holding up projects in Appalachia.

The EPA pointed out that the ruling is a procedural issue and that it does not affect the agency’s authority under the Clean Water Act. In fact, the EPA released in July its final guidance which replaced the interim guidance that the court ruled on yesterday.

This issue still has some time to go before it is finally played out, and coal miners will continue to struggle, but not because they can’t keep knocking the tops off Appalachian mountains. On Monday, Arch Coal revised its outlook for the 2011 fiscal year from EPS of $1.75-$2.15 to $1.00-$1.40. The company has lost production of metallurgical coal at one of its mines following a roof collapse. Several other miners have had similar problems producing the high-priced coal and that is sending mining companies back to Appalachian mines.

Typically, when production of coal is disrupted, the price of coal rises. That’s not happening this time as Australian shipments of coal are fast making up for the disruption to production following last year’s floods. And then there’s the overall weak economy, which cuts demand for energy even more.

Over the past year, all seven of the companies mentioned here have seen share prices drop from around -5% (Consol) to nearly -60% (Alpha). Whether the coal mining stocks are currently a great value or a looming value trap depends more the pace of recovery in the world’s economy than on winning a pyrrhic victory over the EPA. And today’s share price declines bear that out.

Shares of Arch Coal are down more than -2% at around noon today, at $15.44, in a 52-week range of $13.09-$36.99. Alpha’s shares are off -3.5%, at $18.49, in a 52-week range of $15.49-$68.05. Patriot shares are off more than -7.5%, at $9.28, in a 52-week range of $6.92-$29.20. The Market Vectors Coal ETF (NYSE: KOL) is up 0.3%, at $32.03, in a 52-week range of $27.42-$51.87.

Paul Ausick

Alpha Natural Resources has cut its 2011 coal shipment targets down to 102.5 to 109.5 million tons from a prior range of 104 to 112 million tons. Lower metallurgical coal exports to Asia are forcing it to cut production at some of its domestic coal mines.  The company is also reviewing its 2012 estimates as well with global market conditions and it will adjust the 2012 at its next earnings report.

Walter Energy’s lower guidance is due to adverse weather conditions at its Alabama mining site and in its northeast British Columbia site.  Walter now sees earnings of $1.00 to $1.16 EPS for the current quarter and sees $2.63 to $2.95 EPS next quarter.  Thomson Reuters had estimates of $3.23 EPS this quarter and $3.16 EPS next quarter.  Metallurgical coal sales guidance was cut for the second half of 2011 to 5.2 million metric tonnes from a prior target of 5.9 million metric tonnes.

Patriot Coal Corporation (NYSE: PCX), Arch Coal Inc. (NYSE: ACI), and James River Coal Co. (NASDAQ: JRCC) are all getting hit hard: Patriot is down 6.5% at $10.66 and the new 52-week range is $10.35 to $29.20; Arch Coal is down 6.4% at $16.85 and the new 52-week trading range is $16.70 to $36.99; James River is down 5.6% at $8,55 and the new 52-week range is $8.48 to $27.06.  Alpha is down over 7% at $25.07 and the new 52-week range is $23.90 to $68.05 with that low being seen today.  Walter is down over 10% at $66.93 and the new 52-week range is $63.88 to $143.76.

Oddly enough, Yanzhou Coal Mining Co. Ltd. (NYSE: YZC), a steam coal and metallurgical coal player in China, is only down 1.2% at $25.37 and the 52-week trading range is $21.70 to $41.89.

The Market Vectors Coal ETF (NYSE: KOL) is also down ‘only’ 2.4% at $35.88 and its 52-week trading range is $35.73 to $51.87.

Weather is one thing, but a slowing demand out of Asia is another issue.  The world is hoping that growth in Asia can remain high enough that the U.S. and Europe can still avoid a recession or that they can limit the impact of a new recession.  Too much time has passed for there to be a true double-dip recession, but a new poll suggests that 80% of America feels like the recession never even ended.

In copper, a leading indicator, Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX), also suffering from a strike in Indonesia, is down 6.2% at $36.14 and its new 52-week range is $36.12 to $61.35.  It almost seems odd that the iPath DJ-UBS Copper TR Sub-Index ETN (NYSE: JJC) is up 0.6% at $48.38 on the day.

JON C. OGG

If the rumor is true, the deal would be valued at $7.5 billion and it only highlights the value of coal for industry.  Walter Energy produces and exports metallurgical coal for the steel industry and its stock had been faltering considerably of late.  Disappointing earnings and management turmoil have been attributed to much of Walter’s woes so far this year.

What is interesting is that a Bloomberg report this morning quotes a fund manager saying that Anglo American is not a likely bidder.  Go figure.

Elsewhere in more general coal movers, Market Vectors Coal ETF (NYSE: KOL) is up almost 4% at $41.29.  CONSOL Energy Inc. (NYSE: CNX), valued at $10.3 billion, is up 4.6% at $45.62.  Peabody Energy Corp. (NYSE: BTU), valued at $13 billion, is up 4.8% at $47.85.  Alpha Natural Resources, Inc. (NYSE: ANR), valued at $7.3 billion, is up 7.2% at $32.42.

What is interesting is that Walter Energy’s earnings estimates are $10.47 EPS for 2011 and $12.45 EPS.  Coal companies usually trade with a sub-market P/E multiple.  Still, even if things flatten and the estimates in 2012 only match this year’s estimates then Walter trades at about 8.4-times expected earnings.  It pays only 0.6% in dividend yields.

Even after an 18% pop to $88.69 after closing at $74.99 yesterday.  The 52-week trading range is $69.33 to $143.76.  As with all reports and rumors, none are gospel until a deal is formally announced.

JON C. OGG

We would normally group these alphabetically, but not today.  We grouped these in order of size and then we used an alphabetic order when it came to the same size of a buyback announcement.  The first group is the billions of dollars.

We then grouped the stocks by size again from the under $1 billion down to $500 million, and then we grouped the buybacks of under $500 million down to $200 million.  Usually we would cut the list off at buybacks of the $100 million and higher but the list was already too big so we cut the Buyback Kings off at $200 million for August.  Lastly, we have a chart at the very end tallying it all up…. Some $28.7 billion for just the $200 million and higher in new or expanded buyback announcements.  There were literally dozens of other buybacks that were closer to the $100 million mark and many more that were less than that.

The $1 billion and higher alone which were announced in August were as follows: Lowe’s Companies, Inc. (NYSE: LOW); CVS Caremark Corporation (NYSE: CVS); Celgene Corporation (NASDAQ: CELG); Covidien plc (NYSE: COV); Intuit Inc. (NASDAQ: INTU); Discovery Communications, Inc. (NASDAQ: DISCA); Harris Corporation (NYSE: HRS); and Lockheed Martin Corporation (NYSE: LMT).