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Arch Resources (ARCH) Up 9% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Arch Resources (ARCH - Free Report) . Shares have added about 9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Arch Resources due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Arch Resources’ Q2 Loss Wider Than Expected, Sales Top
Arch Resources Inc. reported second-quarter 2020 operating loss of $3.26 per share, wider than the Zacks Consensus Estimate of a loss of $3.22. In the year-ago quarter, however, the company reported earnings of $3.53 per share.
Total Revenues
Total revenues amounted to $319.5 million, which beat the Zacks Consensus Estimate of $266 million by 20.1%.
Segment Details
In the Metallurgical segment, the company sold 1.5 million tons of coal, down 21% from the prior-year figure of 1.9 million tons. It recorded cash margins of $14.22 per ton compared with $53.80 in the year-ago quarter due to lower sales price.
During the quarter, the Powder River Basin segment’s cash margin per ton was (56 cents) versus 79 cents in the prior-year period. The company sold 10.6 million tons, down from the year-ago figure of 17.1 million tons.
In the Other Thermal segment, its cash margin was ($5.56) per ton versus $5.47 in the prior-year period. Shipments also declined 47.4% year over year to 1 million tons.
Highlights of the Release
During the second quarter, Arch Resources invested $46 million in the Leer South mine development and expects to pump more capital between $360 million and $390 million into the project for its completion. As of Jun 30, 2020, the company invested $211 million in the project. It is on track to commence longwall operations at the mine in third-quarter 2021. When fully operational, the mine is expected to produce up to four million tons of High-Vol A coking coal annually for sale in the global metallurgical markets.
Arch Resources is focused on cash preservation and already took steps to reduce overhead and labor costs significantly and further trim its 2020 maintenance capital budget, which at the midpoint stands at $60 million, down 33% from the midpoint of $90 million of the company's initial 2020 guidance issued in February.
Financial Highlights
Cash and cash equivalents as of Jun 30, 2020 were $150 million compared with $153.1 million at the end of 2019.
Long-term debt as of Jun 30, 2020 was $323.9 million compared with $290.1 million at the end of 2019.
Cash provided by operating activities in first-half 2020 was $25.9 million compared with $225.9 million in the year-ago period.
Guidance
Arch Resources expects coking coal volume and total sales volume for 2020 to be 5.9 and 67.8 million tons, respectively.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 61.27% due to these changes.
VGM Scores
At this time, Arch Resources has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Arch Resources has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Arch Resources (ARCH) Up 9% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Arch Resources (ARCH - Free Report) . Shares have added about 9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Arch Resources due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Arch Resources’ Q2 Loss Wider Than Expected, Sales Top
Arch Resources Inc. reported second-quarter 2020 operating loss of $3.26 per share, wider than the Zacks Consensus Estimate of a loss of $3.22. In the year-ago quarter, however, the company reported earnings of $3.53 per share.
Total Revenues
Total revenues amounted to $319.5 million, which beat the Zacks Consensus Estimate of $266 million by 20.1%.
Segment Details
In the Metallurgical segment, the company sold 1.5 million tons of coal, down 21% from the prior-year figure of 1.9 million tons. It recorded cash margins of $14.22 per ton compared with $53.80 in the year-ago quarter due to lower sales price.
During the quarter, the Powder River Basin segment’s cash margin per ton was (56 cents) versus 79 cents in the prior-year period. The company sold 10.6 million tons, down from the year-ago figure of 17.1 million tons.
In the Other Thermal segment, its cash margin was ($5.56) per ton versus $5.47 in the prior-year period. Shipments also declined 47.4% year over year to 1 million tons.
Highlights of the Release
During the second quarter, Arch Resources invested $46 million in the Leer South mine development and expects to pump more capital between $360 million and $390 million into the project for its completion. As of Jun 30, 2020, the company invested $211 million in the project. It is on track to commence longwall operations at the mine in third-quarter 2021. When fully operational, the mine is expected to produce up to four million tons of High-Vol A coking coal annually for sale in the global metallurgical markets.
Arch Resources is focused on cash preservation and already took steps to reduce overhead and labor costs significantly and further trim its 2020 maintenance capital budget, which at the midpoint stands at $60 million, down 33% from the midpoint of $90 million of the company's initial 2020 guidance issued in February.
Financial Highlights
Cash and cash equivalents as of Jun 30, 2020 were $150 million compared with $153.1 million at the end of 2019.
Long-term debt as of Jun 30, 2020 was $323.9 million compared with $290.1 million at the end of 2019.
Cash provided by operating activities in first-half 2020 was $25.9 million compared with $225.9 million in the year-ago period.
Guidance
Arch Resources expects coking coal volume and total sales volume for 2020 to be 5.9 and 67.8 million tons, respectively.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 61.27% due to these changes.
VGM Scores
At this time, Arch Resources has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Arch Resources has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.