5 Metal and Mining Stocks: Earnings Preview

NEW YORK (TheStreet) -- Rio Tinto (RIO), Vale (VALE) and Natural Resources Partners (NRP) are among the five stocks reporting quarterly or annual earnings next week. Given the metal and mining industry's strong fundamentals, these stocks will report robust earnings for the fourth quarter of 2010.

In the past three months, Rio Tinto, Natural Resources Partners, Vale, Penn Virginia Resources ( PVR) and Alumina ( AWC) gained 4.4%, 26.9%, 3.1%, 2.4% and 15.7% respectively. Of these five stocks, on average, analysts polled by Bloomberg expect Rio Tinto and Vale to rise 41.1% and 16.4%, respectively.

Other competitors in the industry such as BHP Billiton ( BHP), Cliffs Natural Resources ( CLF) and Kaiser Aluminum ( KALU) will release their semi-annual and quarterly results on Feb. 16, Feb. 17 and Feb. 23, respectively.

5. Penn Virginia Resources ( PVR) manages coal and natural resource properties and gathers and processes natural gas in the U.S. Penn Virginia is scheduled to announce fourth-quarter results on Feb. 10.

Net income is forecast at $16.63 million on sales of $239.25 million, compared to a net income of $26.43 million on $194.9 million sales recorded during 2009 fourth quarter, according to analysts polled by Bloomberg. Earnings per share are expected at $1.01 per share for 2010, lower than $1.17 per share reported during 2009. For 2011, earnings per share are likely to surge by a record 62% to $1.64.

Penn Virginia recently completed the acquisition of certain mineral rights and associated oil and gas royalty interests in Kentucky and Tennessee from Begley Properties for almost $97.25 million. The purchase includes mineral rights of almost 102 million tons of coal reserves and resources, and royalty interests from approximately 158 oil and gas wells.

Of the eight analysts covering the stock, 25% recommend a buy, while the rest rate a hold. Analysts polled by Bloomberg expect the stock to decline an average 2.9% in value from current levels. The company recently declared its fourth quarter dividend of 47 cents per share, payable Feb. 14, 2011. The dividend amounts to an annual $1.88 per share. Penn Virginia has a current dividend yield of 9.53%.

4. Natural Resources Partners ( NRP) is a limited-partnership company engaged in the business of owning and managing coal properties in the three coal-producing regions of the U.S. - Appalachia, the Illinois Basin and Western U.S. The company does not operate any mines, but leases coal reserves to mine operators on long term. The company is scheduled to report its fourth-quarter earnings on Feb. 10, 2011.

Revenue for 2010 is estimated in the range of $265 to $295 million, with net income per share at $1.00 to $1.20. Earnings per share for 2011 are estimated at $1.35 to $1.70 on revenue of $300 to $350 million. Distributable cash flow is foreseen in the range of $215 to $255 million, with the midpoint of the range indicating an almost 12% increase over the upper limit of the 2010 guidance.

Net income for 2010 fourth quarter is projected at $37.92 million on sales of $76.7 million, higher than $32.93 million recorded on $65.9 million sales for the same quarter in 2009, as per analysts polled by Bloomberg. For full-year 2010, earnings per share are forecast to boost by 25% to $1.46 on sales of $301 million, up 18% from 2009. For 2011, earnings per share are expected at $1.74, compared to $1.46 for 2010.

Of the nine analysts covering the stock, 44% recommend a buy, while 44% rate it a hold and the rest a sell. On an average, analysts polled by Bloomberg expect the stock to dip 11.9% from current levels over the next 12 months. The company recently declared its fourth-quarter dividend of 54 cents per share, payable Feb. 14, 2011. The current dividend yield is 8.07%.

3. Alumina ( AWC) is an Australia-based company engaged in bauxite mining, alumina refining and selected aluminum smelting operations through its 40% ownership of Alcoa World Alumina and Chemicals (AWAC). The company will report its full-year 2010 results on Feb.10.

Net income for 2010 is seen at $83.67 million on sales of $995.9 million, opposed to a net loss of $7.41 million on sales of $1.69 billion recorded during 2009, as per analysts polled by Bloomberg. Alumina is likely to report earnings of 3 cents per share, compared to breakeven in 2009. For 2011, earnings per share are seen at 11 cents, surging 225% from 2010.

A recent Trading Markets report revealed that investors were disappointed with Alumina's quarterly share of profits from the AWAC joint venture. As per statistics, Alumina received $97 million dividends from AWAC during the quarter, taking the total dividend for 2010 to $234 million. An industry analyst commented that the displeasure over Alcoa's profit share is also weighing on Alumina. Heading into 2011, the company believes that its new contracts will have a positive impact on results.

Of the three analysts covering the stock, 33% recommend a buy, while the remaining suggest a hold.

2. Rio Tinto ( RIO) engages in all stages of metals and minerals production. The company comprises of six product groups - exploration of aluminum, copper, diamonds, minerals, energy and iron ore - and two global support groups: technology and innovation. The company's major producing regions are Australia and North America, with operations spread across 50 countries. Rio is scheduled to report its full-year 2010 results on Feb. 10.

Analysts polled by Bloomberg see Rio's earnings doubling to $14.06 billion in 2010 from $6.30 billion in 2009, thanks to higher iron ore volumes and prices. For full-year 2010, the company has recorded annual production of 239 million tonnes iron ore.

Rio is tipped to report net income of $14.15 million on $55.91 billion sales, up 220% and 27% in net income and sales, respectively, from a year ago, analysts polled by Bloomberg say. Earnings per share are pegged at an impressive $6.95 cents for 2010, compared to $3.24 in 2009. For 2011, EPS is likely to more than double to $9.29.

Among the five analysts covering the stock, 80% recommend a buy, while the rest rate it a hold. There are no sell ratings on the stock. On average, analysts polled by Bloomberg expect the stock to rise 41.1% from current levels over the next 12 months.

1. Vale ( VALE) is a metal and mining giant producing aluminum, copper, coal, potash, cobalt, platinum group metals (PGMs), manganese ore, ferroalloys, bauxite, alumina, kaolin, iron ore and iron ore pellets. Besides investing in energy and steel businesses, Vale has principal nickel mines and related processing operations. The company will announce its full-year 2010 results on Feb. 10.

Net income for full-year 2010 is expected at $16.18 billion on sales of $45.77 billion, compared to $5.20 billion on sales of $24.59 billion during 2009, based on consensus estimates of analysts polled by Bloomberg. Earnings per share are pegged at $2.89 for 2010, compared to $1.00 in 2009, and are likely to surge by 40% to $4.05 during 2011.

Vale's board of directors recently approved to pay minimum remuneration to its shareholders in 2011. The total amount of $4 billion will be paid on ordinary or preferred shares in two equal installments during the year. Heading into 2015, the company expects iron ore production to augment by nearly 50% to 450 million tonnes, with a major chunk of the additional production expected to meet China's demand.

Of the 25 analysts covering the stock, 76% recommend a buy, while the remaining suggest a hold. There are no sell ratings on the stock. Analysts polled by Bloomberg expect the stock gain an average 16.4% from current levels over the next 12 months.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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