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Natural Resource Partners LP (NRP) Down 8% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research

It has been about a month since the last earnings report for Natural Resource Partners LP (NRP). Shares have lost about 8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Natural Resource Partners LP due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Natural Resource Beats Q1 Earnings & Revenue Estimates

Natural Resource Partners delivered first-quarter 2019 adjusted earnings of $1.75 per unit, which beat the Zacks Consensus Estimate of $1.30 by 34.6%. Moreover, the bottom line improved 56.3% from the year-ago quarter’s figure.

Total Revenues

In the quarter, total revenues amounted to $67 million and beat the Zacks Consensus Estimate of $62 million by 8%. Also, the top line improved 11.5% from the year-ago quarter’s level.

The upside was driven by stable performance from metallurgical and thermal coal properties. Net income was driven by higher average coal royalty revenue per ton and increased coal overriding royalty revenues from the Williamson property in the Illinois Basin.

Highlights of the Release

The Coal Royalty and Other segment contributed 82.6% to total revenues in the first quarter. Also, the Soda Ash segment contributed 17.4% to revenues.

Total operating expenses in the quarter rose 8.2% to $17.1 million from $15.8 million in the prior-year quarter. The uptick was caused by higher operating and maintenance expenses in the quarter.

Interest expenses declined 21.1% to $14.2 million from $18 million in the year-ago quarter.

Financial Condition

Natural Resource had cash and cash equivalents of $112.4 million as of Mar 31, 2019, up from $101.8 million as of Dec 31, 2018.

The partnership continues to lower outstanding debt levels. Long-term debt was $541.6 million as of Mar 31, 2019, down from $557.5 million as of Dec 31, 2018.

Cash flow from operating activities in the first quarter was $22.8 million, up from $17.4 million in the year-ago quarter.
 

How Have Estimates Been Moving Since Then?

Fresh estimates followed an upward path over the past two months. The consensus estimate has shifted 14.52% due to these changes.

VGM Scores

At this time, Natural Resource Partners LP has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Natural Resource Partners LP has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.



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