Estimates for Natural Resource Partners LP (NRP - Free Report) have been revised upward over the past 30 days, reflecting analyst’s confidence in the stock. The Zacks Consensus Estimate for 2018 and 2019 earnings has been moved 9.8% and 7.2% north to $4.92 and $5.06 per unit, respectively.
Houston, TX-based Natural Resource Partners L.P. is a master limited partnership, principally engaged in the business of owning, managing and leasing mineral reserve properties. The partnership owns coal reserves and coal handling and transportation infrastructure across three major coal producing regions of the United States — Appalachia, the Illinois Basin and the Western United States — besides lignite reserves in the Gulf Coast region.
Let’s focus on the factors that make the stock noteworthy for yield-seeking investors.
Price Appreciation: The firm’s units have surged 34.1% over the past year, outperforming the industry’s growth of 25.3%.
VGM Score: The stock has an impressive VGM Score of A. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors. Back tested results show that stocks with a favorable VGM Score of A or B coupled with a bullish Zacks Rank offer the best investment bets.
Rising Coal Prices: The partnership stands to benefit from recent improvements in the metallurgical coal markets. Increase in metallurgical coal prices will leave a positive impact on coal royalty revenues of the partnership firm. The partnership has extensive metallurgical coal reserves, contributing nearly 2/3rd of its coal royalty revenues. Metallurgical coal is expansively used in the steel industry and per the World Steel Association forecast, global demand for the same will likely increase in 2018 and 2019.
Lower Debt & Better Liquidity: Over the years, the partnership has been reducing its outstanding debt level. As of Jun 30, 2018, long-term debt was $723.2 million, down from the 2017-end level of $729.6 million. Courtesy of this debt decrease, interest expenses in the first half of 2018 were $35.7 million, down 17.8% from the year-ago level of $43.4 million.
Also, as of Jun 30, 2018, the company’s leverage ratio stands at 3.5, much lower than the peak ratio of 5.3 at the end of 2015. The company’s continuous focus on declining its debt and cementing its liquidity position will further strengthen its financial position.
Zacks Rank & Other Stocks to Consider
Natural Resource carries a Zacks Rank #2 (Buy). Some other top-ranked stocks from the Zack Coal Industry are Alliance Resource Partners, L.P. (ARLP - Free Report) , CONSOL Coal Resources LP (CCR - Free Report) and CONSOL Energy Inc. (CEIX - Free Report) . You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Alliance Resource holds a Zacks Rank of 2. It delivered an earnings surprise of 1.59% in the last reported quarter. The Zacks Consensus Estimate for 2018 earnings has moved 5.8% north to $3.30 over the past 30 days.
CONSOL Coal Resources sports a Zacks Rank #1. It pulled off a positive surprise of 6.15% in the earlier reported quarter. The consensus estimate for 2018 bottom line has been revised 1.5% upward to $2.10 over the past 30 days.
CONSOL Energy is a Zacks #2 Ranked player. It came up with a beat of 13.67% in the previously reported quarter. The consensus mark for current-year earnings has been raised 0.6% to $5.10 over the past 30 days.
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