Alliance Resource Partners will announce its 4Q16 earning results on January 27, 2017, before market hours. In this series, we’ll look at analyst expectations for ARLP’s 4Q16 earnings as well as at the factors that led analysts to arrive at those expectations. We’ll also discuss the company’s 2016 guidance and the key indicators that investors should consider in the upcoming earnings release.
Alliance Resource Partners’ stock performance
Although the majority of coal (KOL) stocks began 2016 on a weak note, they’ve outperformed the broader market in 2016. Much of those gains were seen in the second half of 2016. OPEC’s (Organization of the Petroleum Exporting Countries) crude oil production curtailment deal—an historic production cut agreement—with non-OPEC oil producers boosted commodity prices in 2H16.
Donald Trump’s US presidential victory also helped coal stocks retain their gains and their momentum in 4Q16.
ARLP’s stock price rose nearly 61% in 2016. Peers Westmoreland Coal (WLB), Cloud Peak Energy (CLD), and Natural Resource Partners (NRP) more than doubled during the same period. Notably, the VanEck Vectors Coal ETF (KOL), which tracks the overall performance of major coal mining companies around the world, rose nearly 99% in 2016.
Driving factors in 2017
According to the EIA’s (US Energy Information Administration) latest short-term energy outlook, coal is expected to surpass natural gas’s share in electricity generation this winter, which could have a positive impact on the company’s revenue in 1Q17. Natural gas prices and seaborne thermal coal prices could influence company’s domestic and export sales volumes going forward.
In the long term, the fate of the Clean Power Plan and other environment regulations under a Trump presidency could determine the future of major coal mining companies in the US.
Now let’s discuss how analysts are rating Alliance Resource Partners.