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Will Alliance Resource (ARLP) Deliver a Beat in Q1 Earnings?

Zacks Equity Research

Alliance Resource Partners, L.P. ARLP is set to report first-quarter 2019 results on Apr 29, before market open. In the fourth quarter, the partnership witnessed a negative earnings surprise of 6.76%.

What Does the Zacks Model Say?

Our proven model shows that Alliance Resource is likely to beat in the upcoming quarterly results. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: The company has Earnings ESP of +2.90%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The partnership currently carries a Zacks Rank #2. A favorable Zacks Rank combined with +2.90% ESP makes us confident of an earnings beat.

We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is witnessing negative estimate revisions. 

Alliance Resource Partners, L.P. Price and EPS Surprise

Alliance Resource Partners, L.P. Price and EPS Surprise | Alliance Resource Partners, L.P. Quote

Factors at play

Alliance Resource is focused on growth propelled by fundamentals in the U.S. and International market. Higher winter heating across domestic market territory has increased coal burn and reduced stockpiles, which enables the partnership to expand and strengthen contract position. Benefiting from positive market fundamentals, the partnership estimates coal production and sales volumes to grow nearly by 10% in 2019. These factors are expected to yield results in the to-be-reported quarter.

The partnership is making investments in various infrastructure projects to improve productivity. For the first quarter, it expects positive results from the 10th unit at River View and the second unit at Gibson.

After the acquisition of AllDaleMinerals in January, the partnership controls a significant ownership of oil and gas royalty interest. AllDale is positioned in some of the premier production regions in the United States. The acquisition will make positive impacts in to-be-reported quarter.

Q1 Expectations

The Zacks Consensus Estimate for first-quarter 2019 earnings per unit is pegged at 69 cents. The projected figure suggests year-over-year increase of 25.45%. The Zacks Consensus Estimate for first-quarter sales is pegged at $527 million, suggesting year-over-year growth of 15.3%.

Other Stocks to Consider

Investors can also consider the following players from the same sector, which also have the right combination of elements to post an earnings beat in the to-be-reported quarter.

Devon Energy Corporation DVN has an Earnings ESP of +21.28% and a Zacks Rank #2. The company is expected to release first-quarter 2019 results on Apr 30.

EOG Resources, Inc EOG  is expected to release first-quarter 2019 numbers on May 3. It has an Earnings ESP of +2.56% and carries a Zacks Rank #3.

Suncor Energy SU is anticipated to release first-quarter 2019 results on May 1. It has an Earnings ESP of +9.71% and a Zacks Rank #3.

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