Which Top Coal Stocks have the Strongest Earnings Trends?

February 19, 2013

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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’).

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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.

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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…

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