How Analysts Rate ARLP ahead of Its 3Q16 Earnings



Analysts’ ratings

Of the four analysts covering Alliance Resource Partners (ARLP), two (50%) have given the company “buy” ratings, and two (50%) have given it “hold” ratings. No analysts covering the stock have rated it as a “sell” as of October 17, 2016.

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ARLP’s price target

Since the release of ARLP’s 2Q16 results, one out of the four analysts covering its stock has revised its price target upward. ARLP’s consensus 12-month target price was $23.5 on October 17, 2016. This target price indicates a return potential of nearly 3%, considering the stock’s $22.90 closing price on October 17, 2016.

Consensus estimates

Analysts expect Alliance Resource Partners to report higher 3Q16 earnings figures compared to 2Q16. However, they expect a nearly 13% fall in its consolidated revenue on a year-over-year basis.

For 3Q16, analysts expect ARLP’s adjusted EPS (earning per share) to be around $0.73, compared to its adjusted EPS of $0.75 in 3Q15.

Among major coal (KOL) mining companies, analysts recommend “buys” for Alliance Resource Partners. This recommendation was primarily due to the manageable debt on the company’s balance sheet and the expected positive cash flows from its operations.

Unlike its peers Cloud Peak Energy (CLD), Arch Coal (ARCH), Alpha Natural Resources (ANRZQ), and Peabody Energy (BTUUQ), ARLP has consistently reported positive cash flows from its operations under challenging market conditions.

Notable recommendations

Among the four companies covering the ARLP’s stock, JPMorgan Chase (JPM) is overweight on the stock, with a price target of $18 as of October 13, 2016. Stifel (SF) has assigned the stock a “hold” rating with a price target of $23 as of September 30, 2016.

In the next parts of this series, we’ll analyze analysts’ expectations for ARLP and find out whether these recommendations are conservative or optimistic.


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