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Natural Resource Partners (NRP) Down 2.9% Since Earnings Report: Can It Rebound?

Zacks Equity Research

About a month has gone by since the last earnings report for Natural Resource Partners LP NRP. Shares have lost about 2.9% in that time frame, underperforming the market.

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

Natural Resource's Q3 Earnings Miss, Revenues Beat

Natural Resource Partners reported third-quarter 2017 adjusted earnings of 59 cents per unit, missing the Zacks Consensus Estimate of 92 cents by 35.9%.

Total Revenues

In the quarter under review, Natural Resource Partners’ total revenues of $93.3 million surpassed the Zacks Consensus Estimate of $90 million by 3.7%. However, revenues were down from the year-ago figure of $97.9 million by 4.7%.

Segment Details

Coal Royalty and Other segment’s revenues and other income (excluding gains on asset sales) in the third quarter increased 1.1% to $49.4 million from $48.9 million in the year-ago period.

Soda Ash segment’s revenues were nearly $9 million in the third quarter, down 15.9% from the year-ago period.

Construction Aggregates segment’s revenues in the third quarter were $34.7 million, up nearly 9.5% year-over-year.

Highlights of the Release

In the third quarter, coal produced from the company’s leased asset amounted to 5.93 million tons, down19.9% from 7.4 million tons in the year-ago quarter. Despite an improvement in per ton coal royalty revenues in all regions, the drop in production volumes led to an year-over-year decline in coal royalty revenues in first nine months of 2017 from last-year period.

Total operating expenses in the reported quarter were down 20.5% to $46.8 million from $58.9 million in the prior-year quarter.

Interest expenses dropped 10.7% to $20.1 million from $22.5 million in the year-ago quarter.

Financial Condition

Natural Resource Partners had cash and cash equivalents of $121.3 million as of Sep 30, 2017, up considerably from $40.4 million as of Dec 31, 2016.

The partnership continues to lower outstanding debt levels. Long-term debt was $762.4 million as of Sep 30, 2017, down from $987.4 million as of Dec 31, 2016.

In the first nine months of 2017, cash from operating activities was $81.4 million, up 9.1% from $74.6 million in the prior-year period.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last month as none of them issued any earnings estimate revisions.

Natural Resource Partners LP Price and Consensus

 

Natural Resource Partners LP Price and Consensus | Natural Resource Partners LP Quote

VGM Scores

Currently, Natural Resource Partners' stock has a subpar Growth Score of D, however its Momentum is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile 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.

Zacks' style scores indicate that the company's stock is equally suitable for value and momentum investors.

Outlook

The stock has a Zacks Rank #5 (Strong Sell). We expect below average returns from the stock in the next few months.


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