After losing nearly 11% in value in just the last week of October, Teck Resources (TECK -2.58%) stock staged a remarkable comeback in November, ending the month with solid 12.4% gains. Comparatively, shares of rival coal miner Alliance Resource Partners (ARLP 2.74%) slumped 7.4% last month despite reaffirming its full-year revenue and earnings guidance and increasing its quarterly dividend by 1%.
Teck's November gains were clearly guided by company-specific developments as investors soon realized how the market had overreacted to the miner's third-quarter numbers released on Oct. 26.
Teck shares crashed in the last week of October after the coal miner missed earnings estimates for Q3 and forecast lower coal prices for Q4.
In reality, Teck delivered a solid quarter, with revenue rising 36% year over year and net income soaring to $600 million from $234 million in the year-ago quarter. As Teck explained, the surge in its profits was primarily driven by strong sales volumes and prices from its core steelmaking coal business. In sharp contrast, Alliance Resource reported lower coal volumes and prices for the third quarter as its higher-priced coal contracts had expired.
Teck's projected dip in the production of premium steelmaking coal in the fourth quarter because of raw material shortage spooked investors, but only for a short period of time. The stock started November on a firm note, and clocked strong gains after the miner made two shareholder-friendly moves: a supplemental dividend of $0.40 per share over and above its base annual dividend per share of $0.20 and an additional $230 million toward its ongoing share repurchase program.
While it's foolish to compare Teck's dividends with Alliance Resource's as the latter is a master limited partnership that's yielding a hefty 10.5% in dividends currently compared to Teck's barely there yield of 0.7%, higher dividends and share buybacks confirm Teck's improved financial standing, which is vital for its growth.
There was another big takeaway from Teck's Q3 earnings report: Its Fort Hills oil sands project is on track to start oil production anytime now. With Teck's reliance on coal set to lessen and management striving hard to curtail costs and strengthen the company's balance sheet, Teck stock's November rally may not be the last one.