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3 Coal Stocks to Avoid as the Industry Battles Multiple Challenges
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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.
Amid the ongoing drop in coal usage and production, investors can avoid stocks like Warrior Met Coal (HCC - Free Report) , Core Natural Resources, Inc. (CNR - Free Report) , and Peabody Energy (BTU - Free Report) to reduce their exposure in the industry, which has been facing continuous challenge from clean energy producers and regulators that are planning to lower emissions.
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 That Could Weigh on the Coal Industry
Drop in U.S. Coal Production and Usage: Per EIA’s projection, coal production in the United States is expected to be 513.9 million short tons (MMst) in 2026, down from the 2025 volume of 533 MMst, due to lower usage of coal in power generation and higher usage of renewable sources. Per EIA, coal’s share of U.S. electricity generation is projected to decline 100 basis points annually in 2026 and 2027, reaching 16% and 15%, respectively. EIA suggests coal exports can marginally increase in 2026 due to a bottleneck in global LNG exports caused by the ongoing Middle East crisis and countries across the globe are looking for an alternate fuel source to meet their energy requirements.
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, U.S. coal consumption is expected to decline year over year in 2026 and 2027. 2026 U.S coal consumption is expected to drop 7.4% and 2.9% year over year in 2026 and 2027, respectively. 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.
Competition From Cleaner Energy Sources: Coal-fired power generation is increasingly under pressure from more affordable and cleaner energy sources such as natural gas, solar and wind. Strong natural gas supplies and falling renewable energy costs have made these alternatives more appealing to power producers. Utilities are gradually adjusting their generation portfolios to include these cost-effective options in order to lower operating expenses and comply with tighter emissions standards. As renewables continue to expand their share and natural gas remains competitively priced, coal plants are likely to face declining utilization and softer demand in the years ahead.
Zacks Industry Rank Highlights a Weak Industry Outlook
The Zacks Coal industry is a six-stock group within the broader Zacks Oil and Energy sector. The industry currently carries a Zacks Industry Rank #236, which places it in the bottom 3% of 243 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 3% 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 March 2025, the coal industry’s earnings estimates for 2026 have declined 54.7% to $2.46 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 48.3% compared with the Zacks Oil-Energy sector’s rally of 35.9%. The Zacks S&P 500 composite has gained 15.2% 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 10.9X compared with the Zacks S&P 500 composite’s 16.52X and the sector’s 6.97X.
In the past five years, the coal industry has traded as high as 11.43X and as low as 1.82X, with the median being 4.34X.
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 Avoid Amid the Ongoing Weakness
Warrior Met Coal: 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 and 2027 earnings per share has gone down 26.44% and 8.67%, respectively, in the past 60 days. Warrior currently has a Zacks Rank of 5 (Strong Sell).
Core Natural Resources: Canonsburg, PA- based company, along with its subsidiaries, produces, markets and exports both metallurgical and thermal coal domestically and globally. The company has restarted longwall mining at its Leer South mine. However, ongoing conflicts in the Middle East may disrupt shipments and negatively affect Core Natural Resources’ performance.
The Zacks Consensus Estimate for its 2026 and 2027 earnings per share has gone down 65.5% and 12.98%, respectively, in the past 60 days. Core Natural Resources currently has a Zacks Rank # 5.
Price and Consensus: CNR
Peabody Energy: 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. Peabody Energy recently announced that first-quarter sales volume from its Centurion Mine will be lower than previously expected. The company now estimates deliveries of about 250,000 tons for the quarter, as greater-than-anticipated challenges during the mine’s commissioning phase are likely to weigh on its first-quarter targets.
The Zacks Consensus Estimate for Peabody Energy’s 2026 and 2027 earnings per share has gone down 12.93% and 8.89%, respectively, in the past 60 days. Peabody Energy currently has a Zacks Rank #4 (Sell).
Price and Consensus: BTU
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3 Coal Stocks to Avoid as the Industry Battles Multiple Challenges
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.
Amid the ongoing drop in coal usage and production, investors can avoid stocks like Warrior Met Coal (HCC - Free Report) , Core Natural Resources, Inc. (CNR - Free Report) , and Peabody Energy (BTU - Free Report) to reduce their exposure in the industry, which has been facing continuous challenge from clean energy producers and regulators that are planning to lower emissions.
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 That Could Weigh on the Coal Industry
Drop in U.S. Coal Production and Usage: Per EIA’s projection, coal production in the United States is expected to be 513.9 million short tons (MMst) in 2026, down from the 2025 volume of 533 MMst, due to lower usage of coal in power generation and higher usage of renewable sources. Per EIA, coal’s share of U.S. electricity generation is projected to decline 100 basis points annually in 2026 and 2027, reaching 16% and 15%, respectively. EIA suggests coal exports can marginally increase in 2026 due to a bottleneck in global LNG exports caused by the ongoing Middle East crisis and countries across the globe are looking for an alternate fuel source to meet their energy requirements.
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, U.S. coal consumption is expected to decline year over year in 2026 and 2027. 2026 U.S coal consumption is expected to drop 7.4% and 2.9% year over year in 2026 and 2027, respectively. 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.
Competition From Cleaner Energy Sources: Coal-fired power generation is increasingly under pressure from more affordable and cleaner energy sources such as natural gas, solar and wind. Strong natural gas supplies and falling renewable energy costs have made these alternatives more appealing to power producers. Utilities are gradually adjusting their generation portfolios to include these cost-effective options in order to lower operating expenses and comply with tighter emissions standards. As renewables continue to expand their share and natural gas remains competitively priced, coal plants are likely to face declining utilization and softer demand in the years ahead.
Zacks Industry Rank Highlights a Weak Industry Outlook
The Zacks Coal industry is a six-stock group within the broader Zacks Oil and Energy sector. The industry currently carries a Zacks Industry Rank #236, which places it in the bottom 3% of 243 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 3% 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 March 2025, the coal industry’s earnings estimates for 2026 have declined 54.7% to $2.46 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 48.3% compared with the Zacks Oil-Energy sector’s rally of 35.9%. The Zacks S&P 500 composite has gained 15.2% 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 10.9X compared with the Zacks S&P 500 composite’s 16.52X and the sector’s 6.97X.
In the past five years, the coal industry has traded as high as 11.43X and as low as 1.82X, with the median being 4.34X.
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 Avoid Amid the Ongoing Weakness
Warrior Met Coal: 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 and 2027 earnings per share has gone down 26.44% and 8.67%, respectively, in the past 60 days. Warrior currently has a Zacks Rank of 5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price and Consensus: HCC
Core Natural Resources: Canonsburg, PA- based company, along with its subsidiaries, produces, markets and exports both metallurgical and thermal coal domestically and globally. The company has restarted longwall mining at its Leer South mine. However, ongoing conflicts in the Middle East may disrupt shipments and negatively affect Core Natural Resources’ performance.
The Zacks Consensus Estimate for its 2026 and 2027 earnings per share has gone down 65.5% and 12.98%, respectively, in the past 60 days. Core Natural Resources currently has a Zacks Rank # 5.
Price and Consensus: CNR
Peabody Energy: 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. Peabody Energy recently announced that first-quarter sales volume from its Centurion Mine will be lower than previously expected. The company now estimates deliveries of about 250,000 tons for the quarter, as greater-than-anticipated challenges during the mine’s commissioning phase are likely to weigh on its first-quarter targets.
The Zacks Consensus Estimate for Peabody Energy’s 2026 and 2027 earnings per share has gone down 12.93% and 8.89%, respectively, in the past 60 days. Peabody Energy currently has a Zacks Rank #4 (Sell).
Price and Consensus: BTU