Why Did Westmoreland Coal’s Stock Surge 18% on Its 3Q16 Results?



Earnings announcement

Westmoreland Coal (WLB) announced its 3Q16 earnings results before markets opened on November 1, 2016. In this series, we’ll analyze the company’s 3Q16 results in detail, compare its earnings results with analyst expectations, and analyze the factors that caused any deviation. We’ll also have a look at the management’s guidance, analyst expectations for 2016, and the company’s outlook.

Article continues below advertisement

Westmoreland Coal’s stock reaction

Westmoreland Coal reported strong operational performance for the quarter ended September 30, 2016. The company’s record high adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) for 3Q16 and upgraded fiscal 2016 free cash flow guidance led WLB’s stock price to rise by nearly 18% during the intraday trading session on November 1, 2016.

Peer performance

On the day of WLB’s earnings release, peers Peabody Energy (BTUUQ) and Alliance Resource Partners (ARLP) lost nearly 8% and 2%, respectively. However, the stock price of Cloud Peak Energy (CLD) rose nearly 7% 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 2% up during the same period.

The recent rally in commodity prices helped the stocks of major coal mining companies such as Alliance Resource Partners (ARLP), Cloud Peak Energy (CLD), Arch Coal (ARCH), and Westmoreland Coal Company (WLB) to recover from their February lows.

Next, we’ll look at Westmoreland Coal’s coal shipments for 3Q16.


More From Market Realist