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What's Ahead for Cloud Peak Energy (CLD) in Q3 Earnings?

Cloud Peak Energy Inc. CLD is set to report third-quarter 2016 results on Oct 27 after the closing bell. Last quarter, the company posted a positive earnings surprise of 237.14%.

Let's see how things are shaping up prior this announcement.

Factors to Consider

Like all its peers, Cloud Peak Energy was hurt by the drastic fall in coal demand. Natural gas and renewables are eating into coal’s share at a rapid pace due to their environment-friendly nature. In fact, dynamics of the coal industry have now become largely dependent on renewable output and natural gas prices.

In response to lackluster market fundamentals, Cloud Peak Energy is cutting production and realigning its workforce to boost margins.

CLOUD PEAK EGY Price and EPS Surprise

 

CLOUD PEAK EGY Price and EPS Surprise | CLOUD PEAK EGY Quote

However, above-average temperatures in the third quarter are expected to reduce the stockpiles of coal, thus boosting demand.

Earnings Whispers

Our proven model does not conclusively show that Cloud Peak Energy will beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 12 cents. Hence, the difference is 0.00%.

Zacks Rank:  Cloud Peak Energy’s Zacks Rank #1, when combined with a 0.00% ESP, makes surprise prediction difficult.

Note that we caution against stocks with Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Stocks to Consider

At present, we have only one company related to the coal industry worth considering on the basis of our model, which shows that it has the right combination of elements to post an earnings beat this quarter.

Alliance Resource Partners LP ARLP is slated to report third-quarter results on Oct 28. It has an Earnings ESP of +5.00% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Here are a couple of oil & energy stocks that you may consider, as our model shows that they too have the right combination of elements to post an earnings beat this quarter:

Murphy Oil Corporation MUR has an Earnings ESP of +9.52% and a Zacks Rank #3. It is scheduled to report third-quarter earnings on Oct 26.

Devon Energy Corporation DVN has an Earnings ESP of +20.00% and a Zacks Rank #2.  It is slated to report third-quarter earnings on Nov 1.

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CLOUD PEAK EGY (CLD): Free Stock Analysis Report
 
ALLIANCE RES (ARLP): Free Stock Analysis Report
 
DEVON ENERGY (DVN): Free Stock Analysis Report
 
MURPHY OIL (MUR): Free Stock Analysis Report
 
To read this article on Zacks.com click here.

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