It’s no secret that the coal industry in the United States is under fire. A multitude of industry headwinds, including depressed natural gas prices and ongoing regulatory threats, have brought the entire sector to its knees.
Shares of coal producers, including Peabody Energy Corporation (NYSE:BTU) and Alpha Natural Resources, Inc. (NYSE:ANR), have taken an absolute beating over the past few years. With all this going on, you’d be tempted to think the entire business model is in jeopardy, and to avoid all coal stocks entirely. However, it just so happens that there’s one coal stock that’s not only surviving the current environment, but thriving, and represents a fantastic buy.
Meet Alliance Resource Partners, L.P. (NASDAQ:ARLP), the coal Master Limited Partnership that defies logic by crushing earnings estimates seemingly every quarter.
The $2 billion stock by market capitalization just did it again, this time reporting second-quarter revenues, coal sales volumes, and EBITDA that each set company records.
All told, revenues and increased 4.5% and 7.1% respectively, when compared to the same quarter one year ago.
Furthermore, the future remains extremely bright for Alliance Resource Partners, L.P. (NASDAQ:ARLP). Along with its second-quarter report, the company upped its revenue, coal sales volume, and net income expectations for the remainder of the year. And, assuming customer deliveries occur as planned, Alliance Resource Partners, L.P. (NASDAQ:ARLP) is fully priced and contracted for its expected 2013 coal sales.
Alliance Resource Partners, L.P. (NASDAQ:ARLP) strong results and excellent outlook are in stark contrast to the widespread struggles facing other coal companies.
Peabody Energy Corporation (NYSE:BTU)’s second-quarter revenue fell 13%, and its adjusted EBITDA collapsed by 44% versus the same quarter last year. Furthermore, the company’s adjusted diluted earnings per share have declined 80% through the first six months of the year.
Not surprisingly, Peabody Energy Corporation (NYSE:BTU)’s deteriorating fundamentals have taken their toll on the stock. Shares of Peabody Energy Corporation (NYSE:BTU) have lost two-thirds of their value over the past three years.
Meanwhile, Alpha Natural Resources, Inc. (NYSE:ANR) was a $43 stock exactly three years ago, but has dropped nearly 90% in price since that time. The company’s fundamentals have deteriorated for many quarters in a row. Alpha Natural Resources, Inc. (NYSE:ANR) reported a second-quarter loss of $185 million, or $0.84 per share.
Alpha Natural Resources, Inc. (NYSE:ANR)’s results were ugly across the board. Alpha’s margins collapsed and its volumes fell considerably. All told, in the most recent quarter, Alpha Natural Resources, Inc. (NYSE:ANR) realized a margin of $2.72 per ton of coal it sold. That compares to a margin of $6.57 per ton in the same quarter last year.
