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CONSOL Energy (CNX - Analyst Report) will release its first quarter 2013 financial results on Apr 25, 2013. In the prior quarter, this coal producer reported a positive earnings surprise of 95.45%. Let’s see how things are shaping up at CONSOL Energy prior to this announcement.

Why a Likely Positive Surprise?

Our proven model indicates that CONSOL Energy is likely to beat earnings because it has the right combination of two key ingredients:

Positive Zacks ESP:  Expected Surprise Prediction or ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is at +10.53%. This is a leading indicator of a likely positive earnings surprise for the shares.

Zacks Rank #3 (Hold): The stocks with Zacks Ranks of #1, #2 and #3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and #5) should be avoided going into an earnings announcement.  

The combination of CONSOL Energy’s Zacks Rank #3 (Hold) and +10.53% ESP makes us confident of a positive earnings beat on Apr 25.

What is Driving Better-than-Expected Earnings?

CONSOL’s results in the first quarter are expected to be driven by favorable weather in the U.S. and higher international demand. Increasing sales in the to-be-reported quarter will drive the bottom line at CONSOL Energy.

CONSOL Energy had to draw from its reserves to meet the increase in demand for coal in domestic as well as international markets. As a consequence, the company’s total coal inventory dropped to the lowest level in 15 years. CONSOL’s well maintained mines rose to the occasion, surpassing the production guidance set earlier.

Another coal operator Peabody Energy Corporation (BTU - Analyst Report) reported first quarter 2013 loss of 5 cents per share,much narrower than the Zacks Consensus Estimate of a loss of 14 cents. The better-than-expected performance was primarily due to its cost containment initiatives.

Other Stocks to Consider

Other companies related to the coal industry worth considering on the basis of our model, which shows that they have the right combination of elements to post an earnings beat this quarter, include:

  • Walter Energy, Inc. (WLT - Analyst Report) has earnings ESP of +1.16% and carries a Zacks Rank #3 (Hold)
  • American Electric Power Company Inc. (AEP - Analyst Report) has earnings ESP of +2.47% and carries a Zacks Rank #2 (Buy)

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