Earnings estimates for Arch Coal Inc. ARCH have been revised upward in the past 60 days, reflecting analysts’ optimism surrounding the stock. The Zacks Consensus Estimate for 2018 and 2019 earnings has moved up 39.3% and 28.8% to $15.05 and $12.71, respectively.
In the past 12 months, shares of Arch Coal have moved up 1.9% compared with the industry’s decline of 1.8%.
Let’s focus on the factors that make Arch Coal a profitable pick at the moment.
Earnings Trend & Y/Y Estimate Movement
Arch Coal delivered a positive earnings surprise of 109.60% in the third quarter. The company’s earnings beat estimates in three of the past four quarters, the average being 44.21%.
The Zacks Consensus Estimate of year-over-year earnings growth for 2018 is pegged at 32.48%. The consensus mark for year-over-year revenue growth for 2018 is at 1.19%.
The stock and 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 the three factors. Back-tested results show that stocks with a favorable VGM Score of A or B coupled with a solid Zacks Rank offer the best investment options.
Strong Business Portfolio
Arch Coal delivered a strong performance on the back of efficient execution of mining operations. The company delivered great value in the current year in all the segments and set the stage for another impressive show in 2019. The company has signed commitments for 4.6 million tons of coking coal for delivery in 2019, 87% of which is subject to market-based pricing. Powder River Basin is committed to deliver 39.5 million tons at an average price of $12.32 per ton in 2019 and has another 1.4 million tons committed at index pricing.
The company is also striving to lower debt levels. Long-term debt as of Sep 30, 2018 was $302.8 million compared with $310.1 million at the end of 2017. Arch Coal has returned total of $544 million of capital to shareholders through share repurchases and dividends.
Zacks Rank & Other Key Picks
Arch Coal currently sports a Zacks Rank #1 (Strong Buy). A few other top-ranked stocks in the same sector are CF Industries Holdings, Inc CF, Cameco Corporation CCJ and Celanese Corporation CE. While CF Industries sports a Zacks Rank #1, Cameco and Celanese carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CF Industries delivered an average positive earnings surprise of 33.97% in the past four quarters. The Zacks Consensus Estimate for 2018 earnings has moved up 8.8% in the past 60 days.
Cameco delivered an average positive earnings surprise of 169.16% in the past four quarters. The Zacks Consensus Estimate for 2018 earnings have surged 900% in the past 60 days.
Celanese delivered an average positive earnings surprise of 13.29% in the past four quarters. The Zacks Consensus Estimate for 2018 earnings rose by 3.4% in the past 60 days.
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