Back to top

Image: Bigstock

What's in Store for Cloud Peak Energy (CLD) in Q2 Earnings?

Read MoreHide Full Article

Cloud Peak Energy Inc. is set to report second-quarter 2016 results on Jul 28. Last quarter, the company posted a negative earnings surprise of 253.33%. However, it has surpassed the Zacks Consensus Estimate in three of the four trailing quarters with an average positive surprise of 98.4%.

Let's see how things are shaping up prior this announcement.

Factors to Consider

Like all its peers, Cloud Peak Energy too was hurt by the drastic fall in coal demand, which consequently dragged its prices down. Natural gas and renewables are eating away coal’s share at a rapid pace due to their environment-friendly nature.In fact, dynamics of the coal industry have now become largely dependent on renewable output and natural gas prices.

In response to lackluster market fundamentals, Cloud Peak Energy has had to pursue aggressive cost cutting measures in order to boost margins.

The company is presently evaluating the scope and prospects of the Big Metal project, which is located on the Crow Tribe Reservation, as it believes the region will witness substantial demand for thermal coal from the U.S. and other countries over the long run.

CLOUD PEAK EGY Price and EPS Surprise

CLOUD PEAK EGY Price and EPS Surprise | CLOUD PEAK EGY Quote

Earnings Whispers

Our proven model does not conclusively show that Cloud Peak Energy will beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 32 cents. Hence, the difference is 0.00%.

Zacks Rank:  Cloud Peak Energy’s Zacks Rank #3, when combined with a 0.00% ESP, makes surprise prediction difficult.

Note that we caution against stocks with Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Stocks to Consider

At present, we have only one company related to the coal industry worth considering on the basis of our model, which shows that it has the right combination of elements to post an earnings beat this quarter.

CONSOL Energy Inc. (CNX - Free Report) , with an Earnings ESP of +22.70% and a Zacks Rank #2.

However, you may also consider these oil & energy stocks, as our model shows that they too have the right combination of elements to post an earnings beat this quarter:

Murphy Oil Corporation (MUR - Free Report) has an Earnings ESP of +13.50% and a Zacks Rank #2.

Noble Energy, Inc. has an Earnings ESP of +6.25% and a Zacks Rank #2.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>


Unique Zacks Analysis of Your Chosen Ticker


Pick one free report - opportunity may be withdrawn at any time


CNX Resources Corporation. (CNX) - $25 value - yours FREE >>

Murphy Oil Corporation (MUR) - $25 value - yours FREE >>

Published in