Maaf Mbah & Senior OB , newbie pasang iklan trus (BUMI, UNTR, PTBA, ITMG)
Earnings Preview: Coal producers expected to post strong 1Q
updated 3:39 p.m. ET April 21, 2008
NEW YORK - U.S. coal producers are looking forward to strong first-quarter
earnings, analysts say, as prices for the commodity shoot higher and
international production problems work to their benefit.
The first of the group to report, St. Louis-based Arch Coal Inc., said Monday
its first-quarter earnings nearly tripled on expanding production and higher
prices. It also raised its outlook for the year.
Stifel Nicolaus analyst Paul Forward expects bullish first-quarter earnings and
full-year predictions from the rest of the coal sector. Following Arch Coal's
first-quarter report, every publicly traded U.S. miner reached an all-time high.
Domestic prices during the quarter were pushed up in large extent by
international supply problems in coal-rich countries such as Australia, China,
South Africa, and Vietnam. These supply problems are providing an opportunity
for domestic producers to get a bigger stake in the international market,
Forward said.
The next miner slated to report, Peabody Energy Corp., might be hurt by
Australian flooding during the period, because of its massive operations in the
country. But Forward said this factor will be countered by the benefit of
strong U.S. prices, especially in the Illinois basin.
Meanwhile, HSBC's Hassan Ahmed said he is concerned that despite soaring coal
prices, the sector's stocks are now overvalued.
In a client note last week, the analyst said shares of coal producers have
surged an average of 55 percent in the last year, compared with a 5 percent
decline for the S&P 500 in the same period.
The analyst said that although coal prices on the spot market have continued an
upward climb, he suggested that average Wall Street earnings estimates are
still too high for next year _ forecasting about 60 percent earnings growth
from 2008. He predicts that the "overoptimistic" estimates will be steered
lower throughout the year.
Peabody reports Tuesday before the market open. Foundation Coal Holdings Inc.
releases first-quarter results on Wednesday, followed by Consol Energy Inc. and
Massey Energy Co. on Thursday.
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