Coal Stock Losers: Arch, Peabody, Consol

Coal stocks after the week after taking a precipitous plunge Friday on numerous concerns, ranging from recent coal company earnings to uncertainty over China's lending policies and growing competition from natural gas and wind energy.
By Andrea Tse ,

NEW YORK (

TheStreet

) -- Coal stocks are entering the week on shaky ground, after they plunged Friday on numerous concerns, ranging from recent coal company earnings reports, uncertainty over China's lending policies as well as growing competition from reasonably-priced natural gas and wind energy sources.

Arch Coal

(ACI) - Get Report

stock tanked Friday after the company reported fourth quarter earnings per share that missed consensus estimates by 16 cents and provided 2010 guidance that fell far below Wall Street forecasts. Arch Coal ended Friday's trading session down 14.1% at $21.10. Adding to its woes is Arch Coal's bad coal hedge position and current weakness in the Powder River Basin market. The Powder River Basin is a region in Wyoming and Montana and is the largest source of coal reserves in the US.

About 15 million shares of Arch Coal traded hands Friday. The three-month average daily trading volume for the stock is about 5 million.

Peabody Energy

(BTU) - Get Report

ended the trading session down 7% at $42.10 after the company on Tuesday said its fourth quarter earnings fell 68%. Peabody said higher expected seaborne metallurgical and thermal coal prices are anticipated to benefit Peabody's results beginning in the second quarter. The company adds that first quarter 2010 EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is expected to be approximately in line with the fourth quarter of 2009.

Peabody Energy on Wednesday declared a regular quarterly dividend on its common stock of 7 cents per share. The coal company's board of directors on Thursday approved the upgrade and expansion of the Metropolitan Mine in New South Wales, Australia. The expansion is expected to increase capacity by 1 million tons within several years. Capital investments for the expansion are expected to total $70 million, of which approximately $15 million is targeted for 2010.

About 10 million shares of Peabody Energy traded hands Friday. The three-month average daily trading volume for the stock is about 5 million.

Consol Energy

(CNX) - Get Report

lost 5.5% to $46.60 after the company said Thursday that its fourth-quarter profit fell 19%. However Consol provided an upbeat 2010 outlook based on factors such as a modest US economy recovery and Chinese steel demand that is again driving world demand and pricing for coking coal, according to Condol. The company expects to increase its sales to Asian mills throughout 2010.

On January 11, Condol sold a vessel of high-vol coking coal from Bailey Mine in Northern Appalachia to merchant coke plants in China and on Thursday said it sold 5 cargos of Northern Appalachia high-vol coking coal into Asian markets. The three-month average daily volume for Condol is about 3 million; the stock traded on a volume of about 6 million Friday.

International Coal

(ICO)

lost 6.5% at $3.60 after it reported a fourth quarter net loss, though a smaller net loss than the same quarter last year. The company believes utility inventories will approach normalized levels by mid-to-late summer and that growing thermal demand from Asia offers encouraging signs that U. S. exports could rebound by mid-year. The company expects to sell about 2.4 million tons of metallurgical coal in 2010 and about 2.5 million tons of metallurgical coal in 2011.

The three-month average daily volume for International Coal is roughly 2 million. The volume rose to roughly 6 million Friday.

Massey Energy

(MEE)

lost 6.6% at $38.50;

Patriot Coal

(PCX)

dropped 8.6% to $15.50; and

Alpha Natural Resources

(ANR)

dropped 9.1% to $40.60.

Alliance Holdings

(AHGP)

tumbled 2.9% to $27.20.

Last week,

Citigroup

(C) - Get Report

downgraded Arch Coal, Patriot Coal and Massey Energy to sell, citing factors including already-priced-in upside potential. Citi also downgraded Consol Energy to hold from buy.

-- Reported by Andrea Tse in New York

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Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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