Alpha Natural Resources & Walter Energy: Two Coal Miners, Two Different Directions

Consol Energy (CNX) isn’t the only coal miner that can beat earnings, as Alpha Natural Resources (ANR) managed that feat today. Walter Energy (WLT), however has fallen after missing badly.

Shares of Alpha Natural Resources have gained 4.3% to $4.49 at 11:43 a.m., while Walter Energy has slid 5.1% to $6.83. Consol Energy has risen 2.1% a day after it released its own earnings, while Arch Coal (ACI) has jumped 2.6% to $4.70 and Peabody Energy (BTU) has dipped 0.1% to $18.99.

Alpha Natural Resources reported a profit of 7 cents a share, beating forecasts for a loss 58 cents. Sterne Agee’s Michael S. Dudas and Satyadeep Jain explain why positives went beyond earnings:

We are pleased to see more industry met supply rationalization; Alpha lowered 2014 met guidance by 1-2 MT. Management is constructive on thermal markets, expects met markets to tighten 2015. Stockpiles for all regions are below normal now; Alpha getting proposals for term business for Central Appalachian coals (CAPP) as well. We would add to or introduce positions at current levels for risk-tolerant investors.

Walter Energy reported a loss of $1.50, well below forecasts for a loss of $1.21. Cowen’s Daniel Scott and Bryan Bergin explain why it’s not just Walter Energy’s earnings that disappointed:

With the Canadian ops shutting down, the outlook for [Walter Energy] comes down to operating performance at Mine No. 4/7 and maintaining liquidity until seaborne met pricing recovers. While the lack of asset sales commentary may disappoint investors, we are not surprised given the current global met environment.

JPMorgan’s John Bridges and Anant Inani were impressed by Consol Energy’s earnings, which were released yesterday. They explain why:

Consol reported strong cost performance in Q1 on higher production as well as cost reduction efforts that have now started to pay off. Its cost profile should improve further now that the BMX ramp up is complete. Although Consol noted that Q1 typically has better cost performance as no maintenance or worker holidays are built in…

Consol has sold $125m of non-core assets year to date and it expects to add to this with plans to monetize mid-stream assets this year. Additionally, it is expecting to receive $115m in tax refunds related to its sale of NAPP mines to Murray Energy as well as about $200m in Noble "carry" assuming the gas price stays over $4/mmbtu.

Despite today’s gain, shares of Alpha Natural Resources have shed 37% this year, while Walter Energy has plunged 59%. Consol Energy is up 19%, Peabody Energy has dipped 2.8% and Arch Coal is up 6% in 2014.