Why Alpha Natural Resources, Inc. (ANR) Earnings Could Look Scary

Yet coal also faces environmental pressure from the government. Alpha Natural shares plunged along with other coal stocks as new emissions regulations included existing coal-fired power plants. Such moves will force utility companies to bear new costs and potentially lead to even more moves toward gas-fired plants.

Moreover, Alpha Natural Resources, Inc. (NYSE:ANR)’s location in Appalachia isn’t ideal. Peabody Energy Corporation (NYSE:BTU) CEO Greg Boyce said that he expects “noncompetitive production [to be] removed from the system” in the future, essentially predicting that Alpha Natural, CONSOL Energy Inc. (NYSE:CNX), and other Central Appalachian players will have to shut down mines and reduce production, helping bring prices back into equilibrium. Peabody Energy Corporation (NYSE:BTU) announced relatively strong results last week, but its assets are better placed in areas with closer proximity to the highest-demand markets.

In the Alpha Natural earnings report, watch to see how well the company has been able to shift its production mix to take advantage of higher-value met coal. Without some innovative strategies, though, Alpha Natural will struggle to work its way back to profitability in the coming years.

The article Why Alpha Natural Earnings Could Look Scary originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned.

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