The Zacks Coal industry is facing multiple headwinds as the use of coal in U.S. thermal power plants continues to decline. Per the U.S. Energy Information Administration (“EIA”), in 2026, demand for coal is projected to decline as usage of renewable sources increases for electricity generation. In addition, given the ongoing energy transition, marked by utility operators systematically phasing out coal assets, coal demand is expected to drop in 2026.

Per EIA, coal export volumes are expected to improve in 2026, due to an increase in metallurgical coal export volumes. Despite a drop in coal production in 2026, Warrior Met Coal (HCC Quick QuoteHCC - Free Report) , Peabody Energy Corporation (BTU Quick QuoteBTU - Free Report) and Ramaco Resources (METC Quick QuoteMETC - Free Report) , with high-quality met coal production volumes, are expected to gain during this challenging phase.

About the Industry

The Zacks Coal industry consists of companies engaged in the exploration and mining of coal, which is extracted through either open-cast or underground methods. Valued for its high energy content, coal remains a key resource globally for electricity generation and the production of steel and cement. Per the EIA finding, the United States has an estimated 252 billion short tons of recoverable coal reserves, with roughly 58% classified as underground mineable. At current production levels, these reserves are expected to last for many decades. Notably, five U.S. states account for about 70% of annual coal production and 60% of coal extracted from surface mines. However, the EIA projects that coal demand will continue to decline as renewable energy adoption accelerates and coal-fired power plants are gradually retired, posing long-term challenges for the industry.

3 Trends Likely to Impact the Coal Industry

Despite Reliability, the Emission Policy to Hurt the Coal Industry: Coal remains a dependable energy source, capable of providing around-the-clock electricity from generation units. However, rising environmental concerns are leading to a steady decline in its use for power generation. The United States’ Sustainability Plan targets a transition to 100% carbon pollution-free electricity by 2030 and net-zero emissions by 2050. This shift is being accelerated by the increasing adoption of natural gas and renewable energy sources like solar and wind.

Natural gas has become more cost-efficient due to advancements in fracking technology, while renewables have gained traction thanks to falling production costs and supportive government initiatives. According to the EIA, coal’s share in U.S. electricity generation is expected to decline in 2026 from 2025 levels. Without substantial investment in pollution-control technologies for coal-fired power plants, domestic coal usage is likely to keep falling due to the retirement of coal-fired capacity.

U.S. Coal Production: Per EIA’s projection, coal production in the United States is expected to be 520 million short tons (MMst) in 2026, down from the 2024 volume of 531 MMst, due to lower usage of coal in power generation and higher usage of renewable sources. The utilities have also built large coal inventories in 2025, which is also reducing coal demand, ultimately having an adverse impact on production. Coal’s share in the U.S. electric generation is expected to drop 100 basis points in 2026 to touch 16%. 

Coal Industry to Experience Marginal Increase in Exports: U.S. coal companies are likely to gain from 1% increase in export volumes in 2026 compared with 2025, per the projection provided by EIA. The improvement in export volumes was driven by an 8% increase in metallurgical shipments, aided by the longwall expansion at Alabama’s Blue Creek mine and the reopening of the Leer South and Longview mines in West Virginia.

Zacks Industry Rank Indicates Weak Prospects

The Zacks Coal industry is a seven-stock group within the broader Zacks Oil and Energy sector. The industry currently carries a Zacks Industry Rank #235, which places it in the bottom 4% of 244 Zacks industries.

The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates lackluster performance in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.

The industry’s position in the bottom 4% of the Zacks-ranked industries is a result of the negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts have lost confidence in this group’s earnings growth potential. Since December 2024, the coal industry’s earnings estimates for 2026 have declined 26% to $3.31 per share.

Before we present a few coal stocks that you may want to keep track of, let’s take a look at the industry’s recent stock market performance and valuation. 


 

Coal Industry Outperforms the S&P 500 and the Sector

The Zacks Coal industry has outperformed the Zacks Oil and Gas sector and the Zacks S&P 500 composite over the past year.

The stocks in the coal industry have gained 28.8% compared with the Zacks Oil-Energy sector’s rally of 8.9%. The Zacks S&P 500 composite has gained 19.7% in the same time frame.

One-Year Price Performance

 

Coal Industry's Current Valuation

Since coal companies have a lot of debt on their balance sheet, it makes sense to value them based on the EV/EBITDA (Enterprise Value/ Earnings before Interest Tax Depreciation and Amortization) ratio.

The industry is currently trading at a trailing 12-month EV/EBITDA of 9.58X compared with the Zacks S&P 500 composite’s 18.8X and the sector’s 5.52X.

In the past five years, the coal industry has traded as high as 11.05X and as low as 1.82X, with the median being 4.32X.

Enterprise Value-to EBITDA (EV/EBITDA) Ratio vs. the S&P 500

Enterprise Value-to EBITDA (EV/EBITDA) Ratio vs. the Sector

 

3 Coal Stocks to Keep a Close Watch On

Warrior Met Coal, Inc.: Brookwood, AL-based Warrior Met produces and exports premium quality metallurgical coal for the steel industry. The company is a low-cost producer and operates highly efficient longwall operations in its underground mines in Alabama. The premium nature of Warrior’s steel-making coal makes it ideally suited as a base feed coal for steelmakers across the globe.

The Zacks Consensus Estimate for its 2026 earnings per share has gone up 854.5% year-over-year. The current dividend yield of the company is 0.36%. Warrior currently has a Zacks Rank of 3 (Hold).    You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Price and Consensus: HCC

Peabody Energy Corporation: St Louis, MO-based Peabody Energy engages in the coal mining business and has thermal and metallurgical operations. It has the flexibility to increase volumes should demand warrant. The company has a few coal supply agreements (excluding trading and brokerage transactions) expiring at various periods, assuring a steady flow of revenues.

The Zacks Consensus Estimate for Peabody Energy’s 2026 earnings per share has gone up 909.3% year over year. The current dividend yield of the company is 0.98%. Peabody Energy currently has a Zacks Rank #3.

Price and Consensus: BTU

Ramaco Resources, Inc.: Lexington, KY-based Ramaco Resources is the developer of high-quality, low-cost metallurgical coal and poised to benefit from improving metallurgical coal demand. The company is developing a world-class deposit of rare earth elements at the fully permitted Brook Mine. The global metallurgical coal market has expanded steadily in recent years and is expected to continue growing, supported by industrialization in emerging economies and increasing urbanization worldwide, which will create more demand for Ramaco Resources’ met coal.

The Zacks Consensus Estimate for 2026 earnings per share indicates year-over-year growth of 136.45%. The current dividend yield of the company is 1.1%. Ramaco Resources currently has a Zacks Rank #3.

Price and Consensus: METC