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What Factors Drove the Major Coal Company Stocks in 1Q16?

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Nov. 20 2020, Updated 3:30 p.m. ET

Factors that drove coal stocks

Uncertainty surrounding the recovery of coal prices and the enactment of environmental regulations such as the Clean Power Plan were the major factors that impacted coal stocks in 1Q16. As coal competes with natural gas in electricity generation, low natural gas prices had an indirect negative impact on coal stocks in 1Q16.

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Stock performance

The major coal mining stocks reached new lows in 4Q15 due to the slump in the commodities market. However, the recent rally in natural gas prices helped coal mining stocks to recover from their 4Q15 lows.

Of all the major coal mining stocks, Peabody Energy (BTUUQ) fell the most. Peabody Energy filed for Chapter 11 bankruptcy on April 13, 2016. BTUUQ has lost about 89% so far in 2016.

The unique business model of Westmoreland Coal Company (WLB) helped its stock to gain nearly 29% YTD (year-to-date) in 2016. Alliance Resource Partners’s (ARLP) stock gained about 4%.

Among the other major coal mining companies, Arch Coal (ACIIQ) and Cloud Peak Energy (CLD) lost nearly 59% and 17%, respectively, during the same period.

Series overview

In this series, we’ll perform a comparative analysis of the major coal mining companies’ 1Q16 earnings. Also, we will take a close look at their respective management’s guidance and analyst expectations for 2016. We’ll conclude the series with a brief mention of current valuations of incumbent coal miners and an outlook for the coal industry.

In the next part of this series, we’ll compare the coal (UGAZ) shipments’ growth rate of the major coal mining companies in 1Q16.

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