Market Overview

Short Interest in Rhino Resource Partners Falls, Rises in Natural Resource Partners

The short interest moves in coal-related stocks were mixed during the final weeks of March.

The number of shares sold short in Alliance Resource Partners (NASDAQ: ARLP), Cloud Peak Energy (NYSE: CLD), Natural Resource Partners (NYSE: NRP), Walter Energy (NYSE: WLT) and Westmoreland Coal (NASDAQ: WLB) increased between the March 15 and March 28 settlement dates.

But short interest in Alliance Holdings (NASDAQ: AHGP), Alpha Natural Resources (NYSE: ANR), Arch Coal (NYSE: ACI), CONSOL Energy (NYSE: CNX), James River Coal (NASDAQ: JRCC), Peabody Energy (NYSE: BTU), Rhino Resource Partners (NYSE: RNO) and SunCoke Energy (NYSE: SXC) declined during that time.

The three coal stocks that saw the largest swings in short interest in the final two weeks of March were Alliance Holdings, Natural Resource Partners and Rhino Resource Partners.

Alliance Holdings

Shares sold short in this producer of coal primarily for utilities and industrial users dropped more than 11 percent to more than 131,000, on top of a more than four percent decline in the previous period. Days to cover fell to less than four. The short interest at the end of the month was less than one percent of the total float.

This Tulsa, Oklahoma-based company has a market capitalization of about $3 billion and a dividend yield near 5.7 percent. It is expected to report a more than 20 percent year-over-rise in revenue for the current quarter. The long-term earnings per share (EPS) growth forecast is about 14 percent. The return on equity is more than 47 percent.

Four analysts who follow the stock were surveyed by Thomson/First Call. Two recommend buying shares and two recommended holding them. But the analysts feel the stock has some headroom as their mean price target indicates upside potential of about nine percent. That target would be a new multiyear high.

The share price is up about eight percent year-to-date, as well as more than 31 percent higher than a year ago. Over the past six months, the stock has outperformed competitors Arch Coal and Peabody Energy, but it has underperformed the Dow Jones Industrial Average.

Natural Resource Partners

Short interest in this Houston-based company increased about 14 percent in the period to 1.50 million shares. That was the greatest number of shares sold short in at least a year, and it represents about two percent of the company's float. Days to cover rose to about six.

Over the past 60 days, consensus EPS estimates for the current quarter have slipped to a year-over-year decline from year-over-year earnings growth. The company has a market cap near $2.6 billion and a dividend yield of about 9.4 percent. The P/E ratio is less than the industry average, and the return on equity is about 34 percent.

The consensus recommendation of eight surveyed analysts is to buy the shares, and it has been for at least three months. They believe the shares have some room to grow, as their mean price target is more than 11 percent higher than the current share price. That target would be a level shares have not seen since February of 2012.

The share price is more than 24 percent higher year-to-date, including almost nine percent in the past month. The stock has outperformed competitors such as Cloud Energy and CONSOL Energy over the past six months.

Rhino Resource Partners

This Lexington, Kentucky-based producer and processor of metallurgical coal saw short interest retreat about 39 percent in late March to less than 68,000 shares. That was less than one percent of the float and the smallest number of shares sold short since last November. Days to cover was less than two.

Analysts expect Rhino Resource to post lower year-over-year earnings and revenue in the current quarter and the next. The company currently has a market cap of about $380,000 and offers a dividend yield of about 13.2 percent. The P/E ratio is less than the industry average, and the return on equity is less than eight percent.

The analysts' consensus recommendation has been to hold shares for the past three months. Only one polled analyst had a price target, and it suggests about 21 percent potential upside relative to the current share price. That target is less than the 52-week high, though.

Shares have traded mostly between $13 and $14 since February, and the share price is in the same neighborhood as at the beginning of the year. But the stock has outperformed Alpha Natural and James River over the past six months.

Posted-In: Alliance Holdings Alliance Resource Partners alpha natural resources arch coal Cloud Peak Energ consol energyShort Ideas Trading Ideas Best of Benzinga

 

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