Market Overview

Coal Stocks Mixed On Arch Coal Pre-Announcement


Arch Coal Inc (NYSE: ACI) shares gained 4 percent Monday after the company forecast better-than-expected third-quarter results.

Shares of the St. Louis-based coal miner are off nearly 65 percent since January amid falling coal prices and worries about the company's liquidity. But the company closed up $0.06 Monday at $1.56 per share.

Investors in a few other coal companies took heart from the report, with the largest U.S. coal miner, Peabody Energy Corporation (NYSE: BTU), up nearly 2 percent and Walter Energy, Inc. (NYSE: WLT) up 1.3 percent.

But Alpha Natural Resources, Inc. (NYSE: ANR) fell 3.5 percent and Westmoreland Coal Company (NASDAQ: WLB) was off more than 11 percent.

Arch said in light of the recent unprecedented market conditions it decided to offer insight into its third quarter ahead of its full earnings release expected October 28.

The company will post $70 million to $74 million in adjusted earnings before interest, taxes, depreciation, depletion and amortization, compared with $65 million in the second quarter and $193.4 million in the third quarter of 2013.

Cash and short-term investments at September 30 totaled $1.05 billion, up from $990 million at June 30. A year earlier it had $1.4 billion of cash and short-term investments.

Moody's estimated recently that Arch has about three years of cash to cover operations at current coal price levels.

Citigroup's Brian Yu in a note Monday praised Arch's management of working capital but said its EBITDA are insufficient to cover interest expense.

Latest Ratings for ACI

Oct 2020Morgan StanleyMaintainsEqual-Weight
Sep 2020Tigress FinancialInitiates Coverage OnBuy
Jul 2020MKM PartnersInitiates Coverage OnNeutral

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