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Natural Resource (NRP) Down 7.7% Since Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Natural Resource Partners LP (NRP - Free Report) . Units have lost about 7.7% 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 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 catalysts.

Natural Resource Q4 Earnings & Revenues Miss Estimates

Natural Resource reported fourth-quarter 2016 adjusted earnings of $0.91 per unit, down 60.6% from the prior-year quarter. The earnings also missed the Zacks Consensus Estimate of $1.59 by 42.7%.

Full-year 2016 earnings per unit of $6.68 per share were down 29.5% year over year.

Total Revenue

In the quarter under review, Natural Resource Partners' total revenue of $88.1 million lagged the Zacks Consensus Estimate of $90 million by 2.6%. Lower revenue from Coal royalty and Equity in earnings of Ciner Wyoming can primarily be attributed for decreased quarterly revenues by 16.8% from the year-ago quarter.

Further, the partnership's 2016 total revenue was down 9% year over year to $400.1 million.

Segment Details

Coal Royalty and Other segment revenues and other income in the reported quarter decreased 24.0% to $46.1 million from the $60.7 million reported in the year-ago quarter.

VantaCore segment revenue in the reported quarter was $32.7 million up 2.2%.

Soda Ash segment revenue was flat at $12.3 million compared with the year-ago quarter.

Highlights of the Release

In the fourth quarter, the coal produced from its leased asset amounted to 8.69 million tons down from 10.52 million tons in the year-ago quarter. Despite a minor increase of sales price of coal in some regions, the total royalty revenue was down by 1.1% from the year-ago period to $30.1 million.

Total operating expense in the reported quarter declined 14.4% to $61.0 million from $73.3 million in the prior-year quarter.

Operating income in the reported quarter is $27.1 million compared with $32.6 million recorded in the previous-year quarter.

Interest expenses increased 4.5% to $23.3 million from $22.3 million in the year-ago quarter.

Financial Condition

Natural Resource Partners had cash and cash equivalents of $40.4 million as of Dec 31, 2016, down from $41.2 million as of Dec 31, 2015.

Long-term debt was $987.4 million as of Dec 31, 2016, down from $1,186 million as of Dec 31, 2015.

In the quarter under review, cash from operating activities was $25.2 million, down 40.1% from $42.1 million in the prior-year period.

Distributable cash flow of $199.5 million for the calendar year 2016 declined $18.3 million from 2015 mainly owing to the change in net cash provided by operating activities of continuing operations.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in fresh estimates. There has been one downward revision for the current quarter. In the past month, the consensus estimate also shifted downward by 29.1% due to these changes.

VGM Scores

At this time, Natural Resource's stock has a poor Growth score of 'F', a grade with the same score on the momentum front. However, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.

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

The stock is suitable solely for value based on our styles scores.

Outlook

Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #5 (Strong Sell). We are looking for a below average return from the stock in the next few months.


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