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CNX Coal (CNXC) to Report Q1 Earnings: What's in Store?

Zacks Equity Research

CNX Coal Resources LP CNXC will report first-quarter 2017 financial results before the market opens on May 1. In the last four quarters, this coal producer delivered negative earnings surprises.  Let’s see how things are shaping up prior to this announcement.

Factors to Consider

The coal industry faced immense regulatory pressure due to stringent emission regulations passed by the previous U.S. administration. Additionally, cheap natural gas gradually became a preferred choice for utility operators to produce electricity, adversely impacting the demand for coal. However, President Trump has started working on his pre-election promises, which will provide the much-needed impetus to the coal industry.  

Per the U.S. Energy Information Administration (EIA), total U.S. coal consumption will increase from 731.5 million short tons (MMst) in 2016 to 744.4 MMst in 2017 and 750.3 MMst in 2018. Additionally, the usage of coal in U.S. Electric Power sector will increase by nearly 2% to 691.2 MMst in 2017 and improve another 0.6% in 2018. This will definitely help most of the coal companies.

The company witnessed strong demand in the key markets, especially for domestic thermal coal and export metallurgical coal for full-year 2016 and expects the same to continue in 2017 as a result of positive regulatory development.

Earnings Whispers

Our proven model does not conclusively show that CNX Coal Resources is likely to beat estimates this quarter. That 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. But that is not the case here, as you will see below.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks ESP: CNX Coal Resources’ Earnings ESP is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate is pegged at 56 cents.

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Zacks Rank: CNX Coal Resources’ Zacks Rank #3 increases the predictive power of ESP. However, a 0.00% ESP makes surprise prediction difficult.

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

Stocks to Consider

Here is a company you may want to consider as our model shows that it has the right combination of elements to beat on earnings beat this quarter.

Alliance Resource Partners, L.P. ARLP has an Earnings ESP of +9.21% and a Zacks Rank #3. It is slated to report first-quarter earnings on May 1.

Since, we have only one company from the coal industry, investors can consider these stocks from the oil & energy sector, which have the right combination to beat estimates beat this quarter.

PBF Logistics LP PBFX has an Earnings ESP of +10.91% and a Zacks Rank #1. It is slated to report first-quarter results on May 4. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Tallgrass Energy GP, LP TEGP has an Earnings ESP of +5.56% and a Zacks Rank #1. It is slated to report first-quarter results on May 3.

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