Please ensure Javascript is enabled for purposes of website accessibility

Alliance Resource Partners Tumbled as Much as 18.3% Today

By Maxx Chatsko - Apr 15, 2020 at 3:29PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The coal producer has taken steps to limit the impact of COVID-19 to its business, but investors remain cautious.

What happened

Units of Alliance Resource Partners LP (ARLP 0.89%) dropped over 18% today. There wasn't any company-specific news, but the S&P 500 receded 2% as investors continue to assess the economic damage of the coronavirus pandemic.

The coal producer has provided multiple updates to investors in the last month. As of the latest update, initial full-year 2020 guidance has been rescinded, distribution payouts have been halted, and total production this year will be reduced to meet contract volumes. 

As of 3:07 p.m. EDT, the dividend stock had settled to a 15.3% loss. Shares have fallen 65% since the beginning of 2020.

A finger tracing a declining stock chart on a screen.

Image source: Getty Images.

So what

Alliance Resource Partners is a well-run business with healthy profit margins. But roughly 95% of full-year 2019 revenue was generated from supplying and transporting coal. The unprecedented shift away from coal-fired power plants in the United States and volatility in export markets has reduced the company's market opportunity in recent years. 

The coronavirus pandemic is only the latest headwind. The United States has experienced a significant decline in electricity consumption since mid-March as orders to stay indoors have led to steep declines in commercial power demand. That trend is likely to continue through May, although it could take months or longer for a recovery in consumption to materialize.

That's forced Alliance Resource Partners to curtail operations to keep employees safe and meet supply obligations. Production at the company's Illinois Basin mines has been suspended through at least April 26, while production in Kentucky has been halted until a new site opens in early May. 

Now what

The partnership said it will provide a status update when it reports first-quarter 2020 operating results in the coming weeks. Until more details are known, investors can assume the company's operations have been significantly impacted by the coronavirus pandemic.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Alliance Resource Partners, L.P. Stock Quote
Alliance Resource Partners, L.P.
$18.23 (0.89%) $0.16

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.