With all the publicity given to the surge in oil prices lately, many might not have noticed that coal prices have been hot as well. Cloud Peak Energy Inc. (CLD) is hitting new 52-week highs. The stock is still a value play, trading at just 12x forward estimates.
Cloud Peak Energy is the third largest U.S. coal producer. It produces coal at 3 Powder River Basin coal mines in Wyoming and southeast Montana.
It has only been publicly trading since late 2009. But shares have been on a tear in just the last 3 months, gaining 25.7% during that time period.
Cloud Peak Energy Beat By 42.9% in the Third Quarter
On Nov 4, Cloud Peak reported third quarter results and surprised on the Zacks Consensus Estimate by 18 cents. Earnings per share were 60 cents compared with the consensus of 42 cents per share. It has surprised on the Zacks Consensus Estimate the last 3 quarters.
The company had near record production due to strong domestic demand for PRB coal. Its 2010 production is completely sold out. It expects to deliver about 94 million tons with a realized price around $12.33 a ton.
For 2011, 92 million tons are contracted, with 81 million tons under fixed price contracts. The estimated 2011 full-year weighted average realized price would be about $13.04 per ton.
For 2012, it has already contracted 65 million tons from the 3 company-operated mines and of that 51 million tons are under fixed price contracts.
“We are comfortable with our current contracted position for 2011 and, we will seek to contract our few unsold coal tons for 2011, as well as our unsold 2012 and 2013 tonnages at higher prices,” said Colin Marshall, President and Chief Executive Officer.
Zacks Consensus Estimates Rise
In the last 30 days, two estimates have moved higher for 2010, pushing the Zacks Consensus up to $1.94 per share.
Analysts expect earnings growth of 12.1% in 2011, as the Zacks Consensus has risen by 5 cents to $2.18 per share in the last month.
It is scheduled to report fourth quarter results on Mar 15.
Still Attractive Valuations
In addition to a low P/E ratio, Cloud Peak Energy also has a low price-to-book ratio of 1.4, under its peers at 2.8 and well within the value parameters.
The company also has an attractive price-to-sales ratio of 0.5, well below its peers such as International Coal Group (ICO) which has a P/S ratio of 1.4. It is also trading with a much higher P/E ratio of 27.4.
This Zacks #1 Rank (strong buy) also has a solid return on equity (ROE) of 16.4%.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.
