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Bear of the Day: Alliance Resource Partners (ARLP)
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Ahead of its Q2 results later in the month investors may want to be cautious of Alliance Resource Partners (ARLP - Free Report) ) stock.
With Alliance Resource Partners being a diversified producer and marketer of coal in the U.S., its noteworthy that coal-futures have continued to fall over the last two months due to weaker demand. Currently at around $132 per tonne, the broader backdrop in coal prices has been attributed to large consumers such as China and India reducing their imports amid the reshaping of global energy consumption which is reflected in the alternative energy movement to reduce carbon footprints.
Correlating with such, the Zacks Coal Industry is currently in the bottom 10% of almost 250 Zacks industries which has led to ARLP landing a Zacks Rank #5 (Strong Sell) and the Bear of the Day.
Image Source: Trading Economics
Fading Inflationary Mojo
Easing inflation is another factor regarding declining coal prices and Alliance Resource Partners appears to be losing its inflationary mojo from higher commodity prices.
Higher profits are starting to subside with Q2 earnings expected to decline -31% to $0.89 a share versus $1.30 per share in the comparative quarter. On the top line, Q2 sales are projected to dip -2% to $642.72 million. The Zacks ESP (Expected Surprise Prediction) also indicates Alliance Resource Partners could miss earnings expectations with the Most Accurate Estimate having Q2 EPS at $0.86 and 3% below the Current Zacks Consensus.
Image Source: Zacks Investment Research
Also, while total sales are slated to be virtually flat for the foreseeable future, annual earnings are now projected to fall -21% this year and are forecasted to dip another -5% in fiscal 2025 to $3.60 per share.
Image Source: Zacks Investment Research
Declining Earnings Estimate Revisions
More concerning and indicative of short-term weakness in Alliance Resource Partners stock is that FY24 and FY25 EPS estimates have fallen -8% and -13% over the last 60 days respectively.
Image Source: Zacks Investment Research
Bottom Line
On the horizon, Alliance Resource Partners 6.6X forward earnings multiple looks cheap but ALRP could end up being a value trap as plummeting coal prices suggest the company’s EPS outlook may continue to weaken.
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Bear of the Day: Alliance Resource Partners (ARLP)
Ahead of its Q2 results later in the month investors may want to be cautious of Alliance Resource Partners (ARLP - Free Report) ) stock.
With Alliance Resource Partners being a diversified producer and marketer of coal in the U.S., its noteworthy that coal-futures have continued to fall over the last two months due to weaker demand. Currently at around $132 per tonne, the broader backdrop in coal prices has been attributed to large consumers such as China and India reducing their imports amid the reshaping of global energy consumption which is reflected in the alternative energy movement to reduce carbon footprints.
Correlating with such, the Zacks Coal Industry is currently in the bottom 10% of almost 250 Zacks industries which has led to ARLP landing a Zacks Rank #5 (Strong Sell) and the Bear of the Day.
Image Source: Trading Economics
Fading Inflationary Mojo
Easing inflation is another factor regarding declining coal prices and Alliance Resource Partners appears to be losing its inflationary mojo from higher commodity prices.
Higher profits are starting to subside with Q2 earnings expected to decline -31% to $0.89 a share versus $1.30 per share in the comparative quarter. On the top line, Q2 sales are projected to dip -2% to $642.72 million. The Zacks ESP (Expected Surprise Prediction) also indicates Alliance Resource Partners could miss earnings expectations with the Most Accurate Estimate having Q2 EPS at $0.86 and 3% below the Current Zacks Consensus.
Image Source: Zacks Investment Research
Also, while total sales are slated to be virtually flat for the foreseeable future, annual earnings are now projected to fall -21% this year and are forecasted to dip another -5% in fiscal 2025 to $3.60 per share.
Image Source: Zacks Investment Research
Declining Earnings Estimate Revisions
More concerning and indicative of short-term weakness in Alliance Resource Partners stock is that FY24 and FY25 EPS estimates have fallen -8% and -13% over the last 60 days respectively.
Image Source: Zacks Investment Research
Bottom Line
On the horizon, Alliance Resource Partners 6.6X forward earnings multiple looks cheap but ALRP could end up being a value trap as plummeting coal prices suggest the company’s EPS outlook may continue to weaken.