Estimates for Natural Resource Partners LP NRP have been revised upward over the past 60 days, reflecting analyst’s confidence in the stock. The Zacks Consensus Estimate for 2019 earnings has been moved 2.4% north to $5.18.
Houston, TX-based Natural Resource is a master limited partnership, principally engaged in the business of owning, managing and leasing mineral reserve properties. The firm owns coal reserves and coal handling plus transportation infrastructure across three major coal producing regions of the United States, namely Appalachia, the Illinois Basin and the Western United States besides lignite reserves in the Gulf Coast region.
Let’s focus on the factors that make the stock noteworthy for investors.
Price Appreciation: The firm’s units have surged 34.6% over the past 12 months against the industry’s decline of 23.4%.
VGM Score: The stock has an impressive VGM Score of A. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors. Back tested results show that stocks with a favorable VGM Score of A or B coupled with a bullish Zacks Rank offer the best investment bets.
Rising Coal Prices: The partnership stands to benefit from recent improvements in the metallurgical coal markets. Increase in metallurgical coal prices will leave a positive impact on the firm’s coal royalty revenues. It has extensive metallurgical coal reserves, contributing to nearly 2/3rd of its coal royalty revenues. Metallurgical coal is expansively used in the steel industry and per the World Steel Association forecast, global demand for the same will likely bump up in 2019.
Lower Debt & Better Liquidity: Over the years, the partnership has been reducing its outstanding debt level. As of Sep 30, 2018, long-term debt was $716.5 million, bettering the 2017-end level of $729.6 million. Courtesy of this debt decrease, interest expenses in the first nine months of 2018 were $53.2 million, down 16.2% from the year-ago level of $63.5 million.
Also, as of Sep 30, 2018, the company’s leverage ratio stands at 3.5, much lower than the peak ratio of 5.3 at 2015-end. The company’s consistent focus on declining its debt and cementing its capital position will further strengthen its financial standing.
Zacks Rank & Other Stocks to Consider
Natural Resource carries a Zacks Rank #2 (Buy). Some other top-ranked stocks from the same sector are Canadian Solar Inc. CSIQ, SunCoke Energy, Inc. SXC and Warrior Met Coal Inc. HCC, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Canadian Solar delivered an earnings surprise of 49.66% in the last reported quarter. The Zacks Consensus Estimate for 2018 earnings has moved 53.2% north to $2.65 over the past 60 days.
SunCoke Energy pulled off a positive surprise of 302.65% in the trailing reported quarter. The Zacks Consensus Estimate for 2018 earnings has been revised 13.2% upward to 43 cents over the past 60 days.
Warrior Met Coal came up with a beat of 0.62% in the previous reported quarter. The Zacks Consensus Estimate for 2018 earnings has been raised 3% to $8.23 over the past 60 days.
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