Which Top Coal Stocks have the Strongest Earnings Trends?

Earnings trends are extremely important when evaluating stocks. At Wall St. Cheat Sheet, we view increasing earnings quarter-over-quarter as a simple way to gauge whether costs and the business model are stable. Then we like to analyze whether the company is outperforming peers in the sector. This is what we call the “E-Squared” investment analysis (‘E = Earnings Are Increasing Quarter-Over-Quarter’ + ‘E = Excellent Relative Performance Versus Peers and Sector’).

Stocks with improving earnings metrics are worthy of your extra attention. Click here to discover our CHEAT SHEET stock picks now!

Here’s your Cheat Sheet to how the top 4 coal stocks rank via earnings trends:

Alpha Natural Resources, Inc. (NYSE:ANR): Current Price $9.53

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 2,469 2,496 3,917 7,109 6,975
Diluted EPS ($) 2.36 0.63 0.79 -3.76 -11.06

Alpha Natural boosted its revenue after 2010 due to an acquisition, but profitability has tanked thereafter.

These stocks are hitting our Profit Targets. Click here now to discover winning stocks!

Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012 Dec. 31, 2012
Revenue ($) in millions 2,072 1,935 1,848 1,634 1,558
Diluted EPS ($) -4.13 -0.13 -10.14 -0.21 -0.58

It’s worrying to see that quarterly revenue has plunged quarter-over-quarter and the EPS grid is a streak of red. Alpha drops off our list…

Peabody Energy Corp. (NYSE:BTU): Current Price $24.51

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 6,561 5,847 6,740 7,974 8,078
Diluted EPS ($) 3.50 1.66 2.84 3.52 -2.19

Though revenue has been rising, EPS was down in the dumps in 2012…another casualty of cheap gas?

These stocks are hitting our Profit Targets. Click here now to discover winning stocks!

Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012 Dec. 31, 2012
Revenue ($) in millions 2,270 2,039 1,998 2,059 2,017
Diluted EPS ($) 0.82 0.63 0.75 0.16 -3.78

Unfortunately, quarterly revenue is now stagnating and the massively negative EPS in the latest quarter turns us off this stock right away…

James River Coal Co. (NASDAQ:JRCC): Current Price $2.87

Fiscal Year 2007 2008 2009 2010 2011
Revenue ($) in millions 520.56 568.51 681.56 701.12 1,178
Diluted EPS ($) -3.29 -3.91 1.85 2.82 -1.19

Sales have risen at James River, but EPS is negative in three out of the five years above.

These stocks are hitting our Profit Targets. Click here now to discover winning stocks!

Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Sep. 30, 2011 Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012
Revenue ($) in millions 303.86 357.18 301.98 277.36 288.10
Diluted EPS ($) -0.11 -0.82 -0.45 -0.74 -0.59

The quarterly numbers are dismal, with flat revenue and losses across all the quarters. James River is off our list, too…

Arch Coal Inc. (NYSE:ACI): Current Price $5.96

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 2,984 2,576 3,186 4,286 4,159
Diluted EPS ($) 2.45 0.28 0.97 0.74 -3.24

Arch Coal had a bad year in 2012 and EPS has plunged into the red.

These stocks are hitting our Profit Targets. Click here now to discover winning stocks!

Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012 Dec. 31, 2012
Revenue ($) in millions 1,229 1,040 1,064 1,088 968.23
Diluted EPS ($) 0.32 0.01 -2.05 0.22 -1.39

The quarterly numbers show a sharp fall in revenue and profitability in the latest quarter. Arch Coal is also out of the race.

Conclusion

All the coal stocks in thisĀ ”E-Squared” investment analysis were rejected because they did not satisfy the essential condition of earnings increasing quarter-over-quarter.

These stocks are hitting our Profit Targets. Click here now to discover winning stocks!

“E = Earnings Are Increasing Quarter-Over-Quarter” is a core component of our successful CHEAT SHEET investing framework. Don’t waste another minute – click here to discover our CHEAT SHEET stock picks now!