Aliance Resource Partners LP (ARLP) recently hit a new multi-year high at $55.54 on a 32% earnings surprise from late July. With estimates climbing on the back of growing demand, this Zacks #1 rank stock has some solid upward momentum.
Company Description
Alliance Resource Partners LP engages in the production and marketing of coal for utilities and industrial users in the United States. The company was founded in 1971 and has a market cap of $1.98 billion.
Coal companies struggled through a challenging 2009 that saw demand plummet on the global economic slow down. But with the domestic economy on the mend and surging demand from emerging markets like China and India, the industry has once again fallen back into favor. Aliance has been at the front of that trend, posting better than expected Q2 results in late July that included a 31% earnings surprise.
Second-Quarter Results
Revenue for the period was up 32% from last year to $400 million. Earnings also came in strong at $1.82, 32% ahead of the Zacks Consensus Estimate, lifting the company’s average earnings surprise over the last three quarters to 33%.
The company also announced a quarterly distribution of 81 cents per unit holder, an 8.7% increase from last year and a 2.5% increase from just last quarter.
The driver of the good quarter was a simple mix of higher volumes and stronger pricing power on resurgent demand, where average prices were up 12% from last year to a record $51.53 per ton. Production volumes were up 9.4% from last year.
Balance Sheet
Although Aliance’s cash and equivalents drew down $147 million to $10 million, its total debt fell $13 million to $446 million.
Estimates
Estimates took a nice jump forward on the quarter, with the current year adding $1.08 in the last month to $6.74, The next-year estimate is up $1.27 to $6.88, a modest 2% growth projection.
Not only is ARLP on a roll right now, it also has a compelling valuation, trading with a forward P/E of 8X compared to its peers average of 13X.
2-Year Chart
ARLP recently hit a new multi-year high above $55 after spending most of the last few months trending higher. Look for support from the trend on any weakness, take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.
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