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Arch Resources (ARCH) Down 1.1% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Arch Resources (ARCH - Free Report) . Shares have lost about 1.1% in that time frame, outperforming the S&P 500.

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

Arch Resources' Q1 Earnings Beat, 2022 Volume Up

Arch Resources Inc. reported first-quarter 2022 operating earnings per share (EPS) of $12.89, which surpassed the Zacks Consensus Estimate of $9.76 by 32%. In the year-ago quarter, the company incurred a loss of 40 cents per share.

Revenues

Total revenues were $867.9 million, beating the Zacks Consensus Estimate of $649 million by 33.7%. The top line also improved 142.8% from $357.5 million in the year-ago quarter.

Highlights of the Release

In the Metallurgical segment, ARCH sold 1.5 million tons of coal, down 11.8% from the prior-year figure of 1.8 million tons. It recorded cash margins worth $167.48 per ton compared with $24.13 in the year-ago quarter, primarily due to a higher sales price.

During the first quarter, the metallurgical segment's realized price increased nearly 30% on a sequential basis, reflecting continuing strength in global metallurgical coal markets.

In the Thermal segment, the company sold 18.2 million tons of coal, up 47.9% from the prior-year figure of 12.3 million tons. It recorded a cash margin of $5.42 per ton compared with 98 cents in the prior-year period.

Financial Highlights

Cash and cash equivalents as of Jan 31, 2022 were $318.7 million compared with $325.2 million on Dec 31, 2021.

Long-term debt as of Mar 31, 2022 was $132.3 million compared with $337.6 million as of Dec 31, 2021.

Cash provided by operating activities in the first three months of 2022 was $292.9 million compared with $5.16 million in the comparable year-ago period.

Guidance

Arch Resources received a commitment for 5.8 million tons of coking coal volume for 2022. Total thermal coal committed for 2022 is 80.4 million tons. ARCH expects total sales volume in the range of 83.0-87.8 million tons for 2022. Volumes are a tad higher than that announced during the fourth-quarter earnings call.

Arch Resources’ 2022 capital expenditure guidance is projected in the range of $150-$160 million.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

The consensus estimate has shifted -6.39% due to these changes.

VGM Scores

Currently, Arch Resources has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Arch Resources has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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