11-Feb-2012 - Earnings Preview: Arch Coal’s (ACI) Q4 Earnings To Be Dictated By Coal Price

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A largest producer of coal Arch Coal Inc. (ACI) will announce its fourth quarter results on February 10 before the market opens. The demand for coal is expected to fetch year-over-year higher price realization for the company. But sequentially, the company may see pricing pressure. The global demand for coal that is being used for making of steel has also lifted the sentiments favorably for coal producers. While releasing third quarter results, Arch Coal indicated that it could wholesale nfl jerseys ship higher metallurgical coal with increased price realization for every ton. Wall Street analysts are estimating the company to deliver earnings of 32 cents a share on revenues of 1.30 billion for the fourth quarter. Last year, Arch Coal earned 33 cents a share on revenues of 35.49 million. Q3 Results The company reported net income of 19.1 million, sharply down to 80.from 46.7 million and earnings dropped 69 percent to 9 cents a share from 29 cents a share in the year earlier quarter. Adjusted earnings too fell 77.1 percemt to 8 cents a share from 35 cents a share in the year-ago quarter. Net sales increase 36 percent d to 1.19 billion from 874.7 million in the previous year quarter. Analysts' had earnings target of 12 cents a share on revenues of 1.22 billion for the third quarter. In the last four quarter, Arch Coal's earnings failed to meet analysts' estimations in three quarters and in the first quarter, it topped analysts' expectations. The company earned 8 cents a share, 44 cents a share, 36 cents a share and 33 cents a share during the past four quarters. On the top line side, the company generated revenues of 1.98 billion, 1.858 billion, 0.872 million and 835.4 million in the last four quarters. Sequentially, gross margin and operating margin are on the slippery mode. The company's gross margin was 20.45 percent in the third quarter from 26.32 percent in the second quarter, from 25.0 percent in the first quarter and from 25.5 percent in the last year's fourth quarter. mlb jerseys from china Similarly, operating margin for the last four quarters were 7.51 percent, 8.07 percent, 11.7 percent and 10.41 percent respectively. Analyst Take While six analysts have Strong Buy rating, eleven analysts have Buy rating for Arch Coal shares. Ten analysts are recommending the stock for Hold, whereas one analyst terms the stock as Underperformer. Versus Competitors For the trailing 12-month period, Arch Coal's gross margin is 25.12 percent, weaker than industry average of 490.31 percent and rival Consol Energy's (CNX) 36.35 percent but better than Alpha Natural Resources' Reebok NFL jerseys (ANR) 23.88 percent. Operating margin of 11.58 percent is better than industry average of 0.33 percent and ANR's 9.16 percent but lower than CNX's 15.32 percent. iStock Punch Arch Coal needs to improve its gross as well as operating margin as it witnessed a slippery trend during the last four quarters. Though demand for coal will continue, its price realization holds key. Sequentially, price witnessed somewhat downtrend. The latest quarter results should throw some lights on this to make next move.

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