Arch Coal Beats on Both Top and Bottom Lines

Arch Coal (NYSE: ACI  ) reported earnings on Oct. 26. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Sep. 30 (Q3), Arch Coal beat expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue dropped and GAAP earnings per share increased significantly. The non-GAAP profit was a surprise, as analysts had predicted a loss.

Gross margins dropped, operating margins contracted, net margins grew.

Revenue details
Arch Coal booked revenue of $1.09 billion. The 15 analysts polled by S&P Capital IQ predicted a top line of $1.02 billion on the same basis. GAAP reported sales were 9.3% lower than the prior-year quarter's $1.20 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.20. The 23 earnings estimates compiled by S&P Capital IQ anticipated -$0.15 per share. GAAP EPS of $0.22 for Q3 were 144% higher than the prior-year quarter's $0.09 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 17.5%, 330 basis points worse than the prior-year quarter. Operating margin was 5.0%, 340 basis points worse than the prior-year quarter. Net margin was 4.2%, 260 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $1.05 billion. On the bottom line, the average EPS estimate is -$0.15.

Next year's average estimate for revenue is $4.17 billion. The average EPS estimate is -$0.45.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 1,493 members out of 1,570 rating the stock outperform, and 77 members rating it underperform. Among 313 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 297 give Arch Coal a green thumbs-up, and 16 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Arch Coal is hold, with an average price target of $9.33.

Is Arch Coal the right energy stock for you? Read about a handful of timely, profit-producing plays on expensive crude in "3 Stocks for $100 Oil." Click here for instant access to this free report.

Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (1) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 28, 2012, at 7:21 AM, Paulson545 wrote:

    There's a harsh winter coming and China still uses huge amounts of coal. The Wall Street Transcript reported that N Gas and Energy Stocks went from a head wind to a tail wind and that they are in a 3 year up cycle. I would not be surprised to see companies like Arch Coal become takeover targets were they are still undervalued.....jmho

Add your comment.

DocumentId: 2080882, ~/Articles/ArticleHandler.aspx, 4/20/2014 3:42:27 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...