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Why Alliance Resource Partners’ Stock Rose after Its 2Q16 Results

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Earnings announcement

Alliance Resource Partners (ARLP) announced its 2Q16 earnings results for the quarter ended June 30, 2016, before market hours on July 26, 2016.

In this series, we’ll analyze the company’s 2Q16 results in detail, compare the results with analysts’ expectations, and analyze any factors that caused deviation. Also, we’ll have a look at ARLP’s management’s guidance and the outlook for the company.

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Alliance Resource Partners’ stock reaction

Alliance Resource Partners posted strong earnings for the quarter ended June 30, 2016. The company reported adjusted earnings per share (or EPS) of $0.84 against analysts’ consensus EPS estimate of $0.55. ARLP’s stock price was up by nearly 10% during the intraday trading session on July 26, 2016.

Alliance Resource Partners’ strong operational performance during 2Q16, its upward revision of its 2016 net income guidance, and its expected positive cash flows from operations on the backdrop of challenging market conditions helped the stock to close on a high note.

Peer performance

On the day of ARLP’s earnings release, its peers Peabody Energy (BTUUQ) and Cloud Peak Energy (CLD) rose by nearly 2% and 5%, respectively. Westmoreland Coal Company’s (WLB) stock rose by nearly 3% during the intraday trading session.

The broader coal market tracked by the VanEck Vectors Coal ETF (KOL) closed nearly flat, and the SPDR S&P 500 ETF (SPY) closed nearly unchanged.

The recent rally in commodity prices helped the stocks of major coal mining companies such as ARLP, Cloud Peak Energy (CLD), Arch Coal (ACIIQ), and Westmoreland Coal Company (WLB) to recover from their February lows. However, Peabody Energy (BTUUQ) was an exception. Peabody Energy’s stock has fallen by more than 77% so far in 2016. The company filed for bankruptcy protection on April 13, 2016.

Next, we’ll look at Alliance Resource Partners’ coal shipments for 2Q16.

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