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Why Cloud Peak Energy’s Stock Rose after Its 2Q16 Report

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Earnings announcement

Cloud Peak Energy (CLD) announced its 2Q16 earnings results after market hours on July 28, 2016. In this series, we’ll analyze Cloud Peak’s 2Q16 results in detail. We’ll compare its results with analysts’ expectations. We’ll analyze the factors that caused any deviation. We’ll also look at management’s guidance, analysts’ expectations for 2016, and the company’s outlook.

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Cloud Peak Energy’s stock price reaction

Cloud Peak Energy posted strong operational performance for 2Q16. Also, the company reported an adjusted EPS (earnings per share) of $0.48—compared to analysts’ consensus EPS estimate of -$0.33. Cloud Peak Energy’s stock price rose by almost 33% during the early market hours on July 29, 2016. Moreover, the company’s affirmed EBITDA (earnings before interest, tax, depreciation, and amortization) guidance on the backdrop of challenging market conditions helped the stock retain most of its gains. It closed nearly 24% above its previous day’s closing price of $2.74.

Peers’ performance

On the day of Cloud Peak Energy’s earnings release, its peers Peabody Energy (BTUUQ) and Westmoreland Coal Company lost nearly 2% and 3%, respectively. Alliance Resource Partners’ (ARLP) stock rose by nearly 1% during the intraday trading session.

The broader coal market, tracked by the VanEck Vectors Coal ETF (KOL), closed nearly flat. 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 Alliance Resource Partners, Cloud Peak Energy, Arch Coal (ACIIQ), and Westmoreland Coal Company recover from their February lows. However, Peabody Energy was an exception. Peabody Energy’s stock has fallen by more than 79% so far in 2016. The company filed for bankruptcy protection on April 13, 2016.

Next, we’ll look at Cloud Peak Energy’s coal shipments for 2Q16.

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