If NRP makes 33 cents per unit for 2010 fourth quarter (street estimate) they will have made $1.26 per unit for the 2010 year. They now project $1.35 to $1.70 per unit for all of 2011. That puts the unit increase between 7 and 35%. Are my numbers correct??? Appreciate input.
Good luck. I think you sold too early. I think NRP and the other coal MLPs generally peak somewhere around mid-March. Even tho coal is mostly used for electricity (and steel making), I think many investors associate it with heating in the winter, and this winter is pretty bad, where I am.
Not the best reason to hold a stock, I'll admit, but it will have to do for now.
No, your numbers are not correct. Your analysis would normally be correct except for the fact that NRP bought back its IDRs in Q3, issuing quite a few units in the deal, and that transaction affects the computation of EPS quite a bit. So you can't compare the reported EPS for the first 3 Qs of 2010 to 2011 without some adjustments.
On the 1 hand, NRP issued 32 million new units to buy back the IDRs (taking the total outstanding from 74 million to 106 million units), so that's quite a bit of dilution in the EPS calculation, reducing 2011 EPS. On the other hand, GAAP treated the IDRs as preferred stock, and that computation reduced 2010 EPS on the common units. Over time, the 2 adjustments should offset each other, but not right away.
Really confusing stuff, but what it means (for EPS and distribution coverage ratios) is that 2011 isn't directly comparable to 2010.