Can 'Big Coal' Dig Out of its Hole?

NEW YORK ( TheStreet) -- Several large coal companies are once again laying it on the line. Coal has cooled off from low-priced natural gas competition. United States Natural Gas Fund ETF ( UNG) tracks the price of natural gas and is an easy way to get an idea of natural gas price direction.

I included the three biggest coal companies reporting in the next few weeks: Arch Coal ( ACI), Peabody Energy ( BTU), and  Alpha Natural Resources (ANR).

Between government regulations and the low price of natural gas, coal is out of favor. Fortunately, Asia and Europe continue to import coal from North America, although not in the quantities miners would prefer. The exports help to support pricing as orders from power plants wane.

UNG Chart UNG data by YCharts

Up until the fall in natural gas prices, coal was the number one fuel source for electric power plants. With natural gas prices moving higher off the lows last month, some shifting back to coal as an energy source should be anticipated.

Until new power plant construction increases, coal prices will remain under pressure. Obviously, the election coming up will have a large influence on permits and the Environmental Protection Agency.

ANR Chart ANR data by YCharts

Alpha Natural Resources.

Background: The company was founded in 2002 and is based in Abingdon, Va. Alpha Natural trades an average of 16.7 million shares per day with a market cap of $1.7 billion.

52-week high: $47.12, 52-week Low: $7.43, book value: $33.64, float short: 9.31%

Investors are anticipating Alpha Natural to report weak second-quarter earnings on Aug. 8. The consensus estimate is currently for a loss of 25 cents a share, a decline of $1.21 from 96 cents during the same period last year.

Over half the analysts covering Alpha Natural rate it as a buy or strong buy; 13 of the 19 analysts covering the company give a "buy" recommendation, five analysts rate it a "hold" and 1 recommends selling.

Enthusiasm from analysts is falling; 13 out of 19 analysts now rate Alpha Natural a "strong buy" down from 14 analysts a month ago. Compared to three months ago, fewer analysts are rating this company as a "strong buy." The average analyst target price for Alpha Natural is $20.72.

The trailing 12-month price-to-earnings ratio is 7.9, but no forward price multiple because of an expected loss of 91 cents per share this year.

Shareholders have not been rewarded for their patience. Shares have fallen 82.8% in the last year, and in the last month the stock has fallen -13.49%. ANR Revenue Chart ANR Revenue data by YCharts

The company has rising revenue year-over-year of $3.92 billion last fiscal year compared to $2.50 billion in the previous year. The bottom line has rising earnings year-over-year of $95.55 million last fiscal year compared to $58.00 million in the previous year.

In the previous Alpha Natural's earnings release on May 3 the closing price before earnings was $14.85 and based on a recent price of $6.87

Alpha Natural missed earnings three in the last four quarters. The average miss was 24 cents, and the one surprise beat was for 25 cents (250%) per share.

ACI Chart ACI data by YCharts

Arch Coal

Background: The company was founded in 1969 and is headquartered in St. Louis. Arch Coal Inc trades an average of 12.8 million shares per day with a market cap of $1.3 billion.

52-week high: $28.61, 52-week Low: $5.55, book value: $16.83, float short: 14.74%

Arch Coal is anticipated to report very weak second-quarter earnings before the market opens next Friday. The consensus estimate is currently a 17 cents a share loss, a decline of 61 cents (138.6%) from 44 cents during the same period last year.

Analysts are becoming increasingly bearish with Arch Coal; seven out of 20 analysts now rate ACI a "strong buy" down from eight analysts a month ago. The average analyst target price for ACI is $11.23.

The trailing 12-month price-to-earnings ratio is 8, and the company is expected to lose 49 cents per share this year. Investors are receiving 12 cents in dividends for a yield of 1.95%.

Shareholders have not been rewarded for their patience. Shares fell 76% in the last year, but during the last month the stock has climbed 2.16%. ACI Revenue Chart ACI Revenue data by YCharts

Management has provided an improvement of year-over-year revenue. Revenue reported was $3.19 billion last fiscal year compared to $2.58 billion in the previous year. The bottom line has rising earnings year-over-year of $158.85 million last fiscal year compared to $42.16 million in the previous year.

Currently, Arch Coal is trading near the 52-week lows and the price represents the performance.

The last date Arch Coal released earnings was May 1 and the closing price before earnings was $9.22. With a recent price of $6.05, shares have lost 34% in the last quarter.

Arch Coal missed earnings three in the last four quarters; the average miss was 0.09 cents, and the one surprise beat was for 4 cents (12.5%) per share.

BTU Chart BTU data by YCharts

Peabody Energy

Background: Peabody Energy trades an average of 10.3 million shares per day with a market cap of $6.1 billion.

52-week high: $61.37, 52-week Low: $21.12, book value: $21.03, price to book: 1.05, float short: 2.89%

Investors are expecting Peabody to report weak second quarter earnings before the market opens on July 24, 2012. The consensus estimate is currently 53 cents a share, a decline of 58 cents (52.3%) from $1.11 during the same period last year.

Analysts are in love with this company. Peabody is sporting 19 "buy" or "strong buy" from a total of 20 analysts covering the company, no "holds" and only one recommends selling. The average analyst target price for Peabody is $42.67.

Shareholders are not nearly as bullish as analysts. Shares have fallen 61.2% in the last year, and in the last month the stock has fallen -5.54%.

The last date Peabody released earnings was April 19, and the closing price before earnings was $30.46. Based on a recent price, shares have fallen about 25% in the last quarter.

The trailing 12-month price-to-earnings ratio is 5.6, the mean fiscal year estimate price-to-earnings ratio is 8.76, based on earnings of $2.57 per share this year. Investors are receiving 34 cents in dividends for a yield of 1.51%. BTU Revenue Chart BTU Revenue data by YCharts

The company has rising revenue year-over-year of $6.86 billion last fiscal year compared to $6.01 billion in the previous year. The bottom line has rising earnings year-over-year of $774 million last fiscal year compared to $448.20 million in the previous year.

At the time of publication the author was long ANR and does not hold a position in any other stock mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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