Commodities & Metals

Coal Stocks Rise on Alpha Natural Results (ANR, BTU, ACI, CNX, JRCC, WLT, CLD)

coal train
Source: Thinkstock
Alpha Natural Resources Inc. (NYSE: ANR) reported quarterly and full-year results this morning and managed to flop over a very low bar.

The adjusted earnings per share (EPS) loss for the quarter was just $0.19, compared with an estimate for a loss of $0.55. Revenues of $1.56 billion were slightly better than the consensus estimate of $1.55 billion.

Investors are taking hope from the company’s statement that it expects to benefit from an “eventual recovery” in the global market for metallurgical coal. And production costs are forecast to fall to an annual range of $71 to $75 per ton for eastern U.S. coal from an average of $75.84 a ton in the fourth quarter of 2012. In the fourth quarter of 2011, average costs were $81.21, but the company has closed several mines in the past year that contributed to the company’s falling costs.

When Peabody Energy Corp. (NYSE: BTU) reported earnings a couple of weeks ago, its poor showing dragged all the bigger coal stocks down. Same thing happened when Arch Coal Inc. (NYSE: ACI) reported earnings a few days later. Consol Energy Inc. (NYSE: CNX), James River Coal Co. (NASDAQ: JRCC), Walter Energy Inc. (NYSE: WLT) and Cloud Peak Energy Inc. (NYSE: CLD) tagged along for the most part.

This morning, Alpha’s shares are up about 13.7% at $9.65 in a 52-week range of $5.28 to $21.19. Shares of Peabody are up 2.8%, Consol’s shares are up 1.6%, Arch Coal is up 4.1%, Walter Energy shares are up 2.2%, James River is up 6.8% and Cloud Peak is down 0.4%, probably because when the company reported earnings last night they did not quite live up to expectations.

Coal stocks are almost like solar stocks these days. Each reacts to good or bad news about a competitor in the same way they would react if the news was just about itself. If there is money to be made in the sector it is on volatility, not on holding for the long term. In any but the shortest term, coal’s place as a fuel for electricity generation in the United States is on a continual downtrend and should remain there over the long haul.

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