It has been about a month since the last earnings report for Arch Resources (
ARCH Quick Quote ARCH - Free Report) . Shares have added about 15.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Arch Resources due for a pullback? 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 drivers.
Arch Resources Q2 Earnings & Sales Surpass Estimates Arch Resources Inc. reported second-quarter 2021 earnings of $1.66 per share, which surpassed the Zacks Consensus Estimate of $1.57 by 5.7%. In the year-ago quarter, the company incurred a loss of $3.26 per share. Total Revenues
Total revenues amounted to $450.4 million, which beat the Zacks Consensus Estimate of $342 million by 31.7%.
Highlights of the Release
In the Metallurgical segment, Arch Resources sold 2 million tons of coal, down 33.3% from the prior-year figure of 1.5 million tons. It recorded cash margins of $30.34 per ton compared with $14.22 in the year-ago quarter, primarily due to higher sales price.
In the Thermal segment, cash margin was $2.62 per ton versus (99 cents) in the prior-year period. During the second quarter, Arch Resources invested $50 million in the Leer South mine development, and expects to pump capital between $360 million and $390 million into the project for its completion. As of Jun 30, 2021, the company invested $392 million in the project, a little exceeding the projected forecast. It is on track to commence longwall operations at the mine in third-quarter 2021. When fully operational, the mine is expected to produce up to 3 million tons of High-Vol A coking coal annually for sale in global metallurgical markets. During the quarter, Arch Resources committed an additional 300,000 tons of metallurgical coal for delivery in 2021, bringing total commitments for the current year to 7.1 million ton. Financial Highlights
Cash and cash equivalents as of Jun 30, 2021 were $153.5 million compared with $187.5 million on Dec 31, 2020.
Long-term debt as of Jun 30, 2021 was $402.1 million compared with $477.2 million at 2020-end. Cash provided by operating activities in first-half 2021 was $26.1 million compared with $25.9 million in the year-ago period. Arch Resources raised its 2021 capex guidance by $10 million to the range of $210- $230 million to accommodate the modest amount of additional capital required to complete Leer South and fund certain opportunistic optimization efforts at its metallurgical mines. Guidance
Arch Resources committed 7.1 million tons of coking coal volume for 2021. Total thermal coal committed for 2021 is 57.8 million tons. The company expects total sales volume in the range of 62.4-67.2 million tons for 2021.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -23.84% due to these changes.
Currently, Arch Resources has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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.
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 #1 (Strong Buy). We expect an above average return from the stock in the next few months.