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Alliance Resource Partners (ARLP) – Updating Estimates and Increasing our Price Target

Natural Resources
0 min read

Wednesday, July 06, 2022

Alliance Resource Partners (ARLP)
Updating Estimates and Increasing our Price Target

ARLP is a diversified natural resource company that generates operating and royalty income from coal produced by its mining complexes and royalty income from mineral interests it owns in strategic oil & gas producing regions in the United States, primarily the Permian, Anadarko and Williston basins. ARLP currently produces coal from seven mining complexes its subsidiaries operate in Illinois, Indiana, Kentucky, Maryland and West Virginia. ARLP also operates a coal loading terminal on the Ohio River at Mount Vernon, Indiana. ARLP markets its coal production to major domestic and international utilities and industrial users and is currently the second largest coal producer in the eastern United States. In addition, ARLP is positioning itself as an energy provider for the future by leveraging its core technology and operating competencies to make strategic investments in the fast growing energy and infrastructure transition.

Mark Reichman, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Updating estimates. We have updated our 2022 revenue, EBITDA and EPS estimates to $2.362 billion, $759.2 million, and $3.45 from $2.391 billion, $744.6 million, and $3.40. Our respective second quarter estimates are $588.7 million, $190.8 million, and $0.88. While our 2022 revenue estimate was trimmed about $30 million to reflect modest changes in our production estimates, we anticipate stronger margins than previously forecast. Coal prices have strengthened since the beginning of June, and we have increased our 2023 revenue, EBITDA and EPS estimates to $2.6 billion, $799.4 million, and $3.65, respectively.

A win for coal-producing states. In a win for coal-producing states last week, the U.S. Supreme Court ruled that the Environmental Protection Agency (EPA) does not have the authority to set limits on carbon emissions from existing power plants. In our view, the outcome limits federal agencies from exercising broad regulatory power beyond what is authorized by Congress and could lead to a longer transition to lower carbon fuels using a more thoughtful and balanced framework….

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 

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