NEW YORK (TheStreet) -- Key coal supply-and-demand indicators have shown signs of upside recently. As noted recently by Stifel Nicolas: electricity generation in the geographical areas where coal competes as a power-generating fuel rose 8.6% year-over-year for the week ended February 19; meanwhile, U.S. industrial production in January increased 0.9% year-over-year, the first year-over-year increase since March 2008.
As global demand for metallurgical coal heats up, the action in coal stocks will surely intensify. Thus, we offer a preview of what's to come for five coal mining stocks....

Arch Coal ( ACI), for one, provides approximately 16% of the U.S. coal supply from the company's 11 mining complexes in Wyoming, Utah, Colorado, West Virginia, Kentucky and Virginia. Arch Coal saw more than 180 million tons of pro forma coal sales in 2008, and supplied U.S. utilities with the fuel for about 8% of the country's electricity.

In the fourth quarter, Arch reported earnings of $1.5 million, or a penny a share, on revenue of $725.5 million, a fall from $62.3 million, or 44 cents a share, on revenue of $729.9 million in the prior-year quarter; inclement weather and electric outages impacted several of Arch's operations during December 2009. Excluding charges, Arch posted earnings of 11 cents a share, falling below the Street consensus expectation of 17 cents a share.

Arch Coal is expecting adjusted earnings of 50 cents to $1 a share in 2010, compared with consensus predictions of 81 cents a share. Arch's "exposure to central Appalachia is probably likely to have the most operating leverage out of all the regions that they operate in," RBC Capital Markets analyst Lasan Johong says. "That's going to help provide upside margin, maybe not so much in the first quarter, but going forward. However, the "first quarter could surprise," Johong says.

During the fourth quarter, Arch's outlook for metallurgical coal demand continued to improve, driven by increasing global and domestic steel utilization rates. The company points out that strength in the steel sector has traditionally pulled high-quality steam coal into metallurgical coal markets, which over time should benefit steam coal markets. Johong has a sector perform opinion on Arch Coal stock with a price target of $24 and earnings estimate of 7 cents a share for the quarter, compared with the 9-cent consensus.

Alpha Natural Resources ( ANR) is the U.S.'s third-largest coal producer, producing almost 100 million tons of steam and metallurgical coal. Alpha produces, processes and sells steam and metallurgical coal from more than 60 mines and 14 coal preparation facilities throughout Virginia, West Virginia, Kentucky, Pennsylvania and Wyoming, and also is involved in the buying and resale of coal mined by others.

Alpha Natural Resources reported fourth-quarter earnings of $18 million, or 15 cents a share, on coal revenue of $787.5 million, compared with $5.6 million, or 8 cents a share, amid coal revenue of $512.8 million a year earlier. Excluding one-off items, fourth quarter adjusted income from continuing operations was 51 cents a share compared with the 45 cents consensus estimate.

Subsequent to Alpha Natural's fourth-quarter earnings release, Stifel Nicolaus upped its earnings estimate from $2.85 to $2.95 a share, below the consensus estimate of $2.97 a share for 2010. The comparatively conservative estimate reflected concerns about rising production costs in Central Appalachia, brought on by increasing purchased coal costs, royalties, and labor and materials inflation.

For the first quarter, Stifel reduced its estimate from 56 cents a share to 53 cents a share, lower than the consensus estimate of 55 cents a share, as "we expect 1Q10 volumes to be the weakest of the year in both the eastern U.S. and Powder River Basin due mainly to weather-related rail disruptions and likely lower metallurgical coal pricing in 1Q10 vs. the rest of 2010," Stifel analyst Paul Forward notes. Meanwhile Citi ( C) maintains a buy opinion on Alpha with a target price of $58, noting that Alpha offers the best relative value in coal and is Citi's preferred name for metallurgical coal exposure.

Consol Energy ( CNX) is the biggest producer of high-Btu bituminous coal in the U.S. and produces coalbed methane gas, too. Consol Energy subsidiary CNX Gas is the biggest producer of natural gas in the Appalachian Basin.

Consol Energy reported earnings attributable to Consol Energy shareholders of $143.2 million, or 78 cents a share, in the fourth quarter, compared with the consensus estimate of 74 cents a share, and the lower than $176.3 million, or 97 cents a share, a year ago. Revenue and other income amounted to $1.238 billion, down 0.4%. Although revenue from Consol's thermal coal business was higher, metallurgical coal revenue and gas revenue were lower.

"I see a little bit less upside exposure because of their natural gas position, and I think it's going to hurt more than help in first quarter," RBC Capital Markets analyst Lasan Johong says. However, Johong noted, "the second half of the year will bounce back because of natural gas exposures."

Johong has an earnings estimate of 85 cents a share for the current quarter, compared with the Street's consensus forecast of 79 cents. He has an underperform opinion on Consol Energy stock with a price target of $46.

Massey Energy ( MEE) is the fourth largest coal company in the U.S. and the largest in Central Appalachia from the standpoint of produced coal revenue. Massey has 2.3 billion tons of high-quality coal reserves and in 2007 churned out and sold almost 40 million tons of coal.

Massey Energy reported earnings of $24.4 million or 28 cents a share amid produced coal revenue of $498.7 million for the fourth quarter, compared with earnings of $47.7 million or 56 cents a share amid produced coal revenue of $640 million a year ago. Massey narrowly beat the Street's consensus expectation of 27 cents a share for the quarter.

Following the fourth quarter report, Stifel Nicolaus upped its earnings per share estimate from $2.50 to $2.65, compared with the consensus estimate of $2.63 for 2010. This mainly takes into account firmer pricing for metallurgical coal compared with Stifel's earlier estimates and somewhat lower production costs.

Still, Stifel analyst Paul Forward notes he expect Massey's 1Q10 results to be "the weakest of the year due to weather-disrupted rail shipments and the carryover of lower-priced metallurgical coal tons from 2009." Thus, Stifel is reducing its first-quarter earnings-per-share estimate from 49 cents a share to 38 cents a share, lower than the consensus estimate of 42 cents a share. HSBC maintains a hold opinion on Massey Energy stock with a $42 price target. "We prefer Alpha Natural Resources for metallurgical coal exposure," notes analyst Brian Yu.

Patriot Coal ( PCX) produces and markets coal in the eastern U.S. with 14 mining complexes in Appalachia and the Illinois Basin. Patriot ships to domestic and international electric utilities, industrial customers and metallurgical coal customers, and controls about 1.8 billion tons of proven and probable coal reserves.

Patriot Coal reported earnings of $10.9 million, or 12 cents a share, for the fourth quarter on revenue of $503.2 million, compared with $63.4 million, or 82 cents a share, on revenue of $541 million a year earlier amid a restructuring and impairment charge related to coal reserves and infrastructure. Excluding one-off items, Patriot reported a loss of 38 cents a share versus the consensus estimate of a 40 cents a share loss.

After Patriot published its fourth-quarter report, Stifel Nicolaus upped its loss per share estimate from $1.10 to $1.33 versus the consensus loss per share estimate of $1.06 for 2010, as it expressed worries about negative mid- to long-term views for Patriot's volumes and rising legacy liability costs.

Stifel Nicolaus notes that it would like to await further signs of improved pricing for Appalachian metallurgical and thermal coal, given that it believes Patriot's place as an important Appalachian metallurgical and thermal coal producer offers big earnings potential in 2010 to 2011 if these markets get better. Citi upholds a sell opinion on the Patriot Coal stock and $13 price target due to Patriot's "disadvantaged cost position and lack of near-term profitability due to below-market thermal coal contracts."

-- Reported by Andrea Tse in New York

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