Next Tuesday, Arch Coal (NYSE:ACI) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed, knee-jerk reaction to news that turns out to be exactly the wrong move.

Arch Coal has suffered along with the rest of the coal industry as low prices have made it extremely difficult for coal miners to remain profitable. But will rising prices elsewhere in the energy industry finally help the company rebound? Let's take an early look at what's been happening with Arch Coal over the past quarter and what we're likely to see in its quarterly report.

Stats on Arch Coal



Analyst EPS Estimate


Year-Ago EPS


Revenue Estimate

$912.03 million

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

How will Arch Coal fare this quarter?
Analysts have remained pessimistic in recent months about Arch Coal's earnings prospects, as they've widened their loss estimates for the just-finished quarter by $0.04 per share and now expect full-year 2013 to come in with earnings that are $0.36 per share worse than they believed three months ago. The stock has struggled as well, losing more than a quarter of its value since mid-January.

Arch Coal and its peers have all struggled due to low natural gas prices. With many former coal users in the U.S. having switched to natural gas for cost and environmental reasons, coal companies have seen big sales volume declines domestically. In particular, Arch and Alpha Natural Resources (NYSE:ANR), both of which have extensive operations in the Appalachian region, had to stop production at several mines in order to cut costs. Even with natural gas prices finally starting to rise somewhat, coal has a long way to go before it will return to its former popularity within the U.S. -- if ever.

Fortunately for Arch, natural gas isn't nearly as cheap internationally, and so the company has looked to international markets to sell its coal. With the help of energy transportation specialist Kinder Morgan Energy Partners (NYSE:KMP), Arch Coal has committed to long-term coal export deals to take advantage of strong coal demand in China, India, and other areas of the world where natural gas is either unavailable or too expensive to compete with coal.

Still, conditions are so bad in the industry that even narrower-than-expected losses are cause for celebration. Just yesterday, Peabody Energy soared after announcing its quarterly results, despite its revenue plunging 14% and posting a net loss for the quarter. That bodes well for Arch Coal because the company only has to avoid a worst-case scenario to meet or exceed investors' expectations.

In Arch Coal's report, watch if the company has managed to see continued strength in its production outside Appalachia. Last quarter, record operating performance for its western bituminous coal operations helped cushion the blow for Arch Coal, and if export interest continues to be strong, the company has the potential to post a strong rebound in the future.

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Fool contributor Dan Caplinger has no position in any stocks mentioned, and neither does The Motley Fool. You can follow Dan on Twitter @DanCaplinger. 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.