3 Earnings Reports That Caught My Attention Last Week

As we dive headfirst into the meat-and-potatoes of fourth-quarter earnings reports, and with three-quarters of the year already in the books, I can't help but point out that the majority of reports up until now have been better than expected. With so many companies reporting during the weeks that comprise earnings season, it's easy for some earnings reports to fall through the cracks.

Each week this year, I've taken a look at three companies that could be worth further research after either beating or missing their profit expectations. Today, we'll take a gander at three more companies that reported earnings last week. They may have slid under your radar, but they deserve a look.

Company

Consensus EPS

Reported EPS

Surprise

Arch Coal (NYSE: ACI  )

($0.15)

$0.20

233%

Agnico-Eagle Mines (NYSE: AEM  )

$0.42

$0.77

83%

Procter & Gamble (NYSE: PG  )

$0.96

$1.06

10%

Source: Yahoo! Finance.

Arch Coal
You know what happens when you light a coal brick on fire, right? It just keeps burning and burning and burning! That's exactly what's going on with the coal sector at the moment with Arch Coal, Peabody Energy (NYSE: BTU  ) , and CONSOL Energy (NYSE: CNX  ) crushing Wall Street's expectations last week, lighting the sector on fire.

All three producers of thermal and metallurgical (steel-strengthening) coal have seen benefits from rising natural gas prices and the passing of a $156 billion infrastructure plan in China. By reducing their outputs months ago, these coal producers have done a decent job of buoying coal prices and are now enjoying a surge in demand as coal prices become more attractive relative to natural gas for utilities and as foreign nations ramp up large infrastructure projects.

Arch Coal delivered the most sizable beat, actually reporting a $0.20 profit when a loss of $0.15 was expected, thanks in part to tighter spending. Arch's CEO, John Eaves, noted that thermal coal will still face lingering challenges in 2013, but metallurgical coal appears to have bottomed. With numerous international export deals already in place, Arch remains one of my favorite rebound candidates in the coal sector.

Agnico-Eagle Mines
Goldex who? It's been roughly a year since Agnico-Eagle permanently closed its Goldex Mine due to safety reasons. That mine was expected to account for 17% of this year's production. How quickly we forget when the results are this darn good!

For the quarter, Agnico reported record quarterly cash flow of $199.5 million once one-time costs are factored out. The key factor driving this growth, aside from enjoying higher average realized selling prices, is higher production levels. Whereas many of its peers are suffering from delays, a good portion of Agnico's mines are delivering above-average yields. Both its Meadowbank and Kittila mines yielded record gold ounce totals and cash costs have been falling. Year-over-year costs actually fell 1% compared to most miners, which have reported double-digit cost hikes due to labor, fuel, and build-out inflation.

Based on Agnico's report, it looks like its operational efficiencies are on pace to continue into next year even with slight production challenges at its LaRonde mine. Overall, Agnico boosted its 2012 production forecast, lowered its cash cost outlook by $30 per oucne, and maintained a production target of 990,000 ounces of gold in 2013. I'd call that a triple-play of perfection!

Procter & Gamble
Chances are, you probably caught a glimpse of, or heard about, P&G's earnings report -- but did you really, really read it? This was a solid report through and through, and demonstrates that the actions P&G is taking to rejuvenate its business are actually working.

P&G's revenue figures were a bit misleading as they essentially showed a 4% decline year over year; however, keep in mind that a negative currency effect of 6% actually wiped out all of P&G's overseas revenue gains. What is noteworthy is that the consumer products giant did allude to the fact that it's once again gaining market share as it focuses on its most important brands and, more important, on emerging markets.

P&G is also in the process of cutting jobs in order to reduce costs by up to $10 billion by 2016, and has seen those cuts occurring well ahead of plan. Although I hate to see job cuts spurring margin expansion, it's a necessary evil until P&G properly balances its emerging-market growth with its domestic consumer staples business. P&G may not be the most attractive or exciting company you can invest in, but this is an earnings report shareholders can be relatively proud of.

Foolish roundup
Sometimes an earnings beat or miss isn't as cut-and-dried as it appears. I've given my two cents on what's next for each of these companies -- now it's your turn to sound off. Share your thoughts in the comments section below and consider adding these stocks to your free and personalized Watchlist.

Don't be cornered in by just coal. Our analysts at Motley Fool Stock Advisor recently highlighted the one energy stock you need to buy before 2014 that stands to benefit whether coal, natural gas, or nuclear energy sees a boom. Find out its identity, and the reasoning behind that selection, for free, by clicking here to get your copy of this latest special report.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

Motley Fool newsletter services have recommended buying shares of Procter & Gamble. 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 that always exceeds expectations.


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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 29, 2012, at 1:25 PM, Paulson545 wrote:

    The Wall Street Transcript reports that the headwind facing N Gas and Energy Stocks is turning into a tailwind. Winters coming early and coal stocks are way over sold. IMO Arch Coal should do well.

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