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Reasons to Add Alliance Resource Partners to Your Portfolio

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Earnings estimates for Alliance Resource Partners, L.P. ARLP have been revised upward in the past 30 days, reflecting analyst’s optimism in the stock. The Zacks Consensus Estimate for 2018 and 2019 earnings moved up 6.1% and 13% to $3.30 and $2.26, respectively in the aforesaid time period.

Let’s focus on the factors that make Alliance Resource a profitable pick.

Earnings & Growth Projections

In second-quarter 2018, Alliance Resource delivered earnings of 64 cents per share, beating the Zacks Consensus Estimate by 1.59%.

The Zacks Consensus Estimate for current-year earnings is pegged at $3.30, reflecting year-over-year improvement of 14.98%.

Price Performance

The units of Alliance Resource have gained 13.1% in the past six months, against the industry’s decline of 2.8%.

 

Zacks Rank & VGM Score

The stock holds a Zacks Rank #2 (Buy) and has an impressive VGM Score of A. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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 are the best investment options.

Coal Production

Coal production increased 2.6% to 9.7 million tons in second-quarter 2018 from 9.5 million tons in the prior-year quarter.  Alliance Resource expects total coal production in the range of 40.0- 41.0 million tons in 2018. The new Environmental Protection Agency's (EPA) Affordable Clean Energy (ACE) rule is expected to boost demand for coal and have a positive impact on coal producers.

Lower Debt/Capital

Alliance Resource has debt/capital ratio of 25.43% compared with the industry’s 39.73% and S&P 500 composite’s 41.72%.

Other Stocks to Consider

A few other top-ranked stocks from the Zacks coal industry are Consol Energy Inc. (CEIX - Free Report) , CONSOL Coal Resources LP CCR and Peabody Energy Corporation BTU.

Consol Energy holds a Zacks Rank #2. The company delivered an average positive surprise of 86.80% in the past four quarters. The Zacks Consensus Estimate for 2018 earnings moved 8.9% north to $5.10 in the past 60 days.

CONSOL Coal sports a Zacks Rank #1. The company delivered an average beat of 2.72% in the trailing four quarters. The consensus mark for current-year earnings rose 8.2% to $2.10 in the past 60 days.

Peabody Energy holds a Zacks Rank #2. It pulled off an average positive surprise of 2.61% in the past four quarters. The consensus estimate for 2018 bottom line has been revised 24.8% upward to $3.62 in the past 60 days.

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