It's difficult to imagine analysts falling prey to lofty expectations within an industry this deeply buried in weakness, but that's precisely what occurred this week after coal miner Arch Coal (OTC:ACIIQ) released earnings for the fourth quarter and full year of 2012.

In the defense of those analysts, let's begin by pointing out only a small portion of the large $0.28 per share gap -- between analysts' consensus for a loss of $0.14 per share and Arch Coal's adjusted loss of $0.42 per share -- can be linked back to Arch's operating performance. With a couple of exceptions that we'll touch upon below, Arch performed as expected within an extremely challenging market environment for U.S. coal miners.

One major downside surprise came in the form of a $58 million loss booked on a contract settlement relating to the bankruptcy of Patriot Coal. Unlike the separate $230 million in goodwill and asset impairment charges incurred during the quarter, that $58 million hit (roughly $0.22 per share) does carry through to adjusted earnings.

Compared to its peers, meanwhile, Arch Coal's asset impairment charges for 2012 -- totaling $346 million -- were relatively tame. Walter Energy (OTC:WLTGQ) booked a huge $1.1 billion charge during the third quarter, Cliffs Natural Resources (NYSE:CLF) made $1.4 billion disappear, and Peabody Energy (NYSE:BTU) recorded goodwill impairment and mine closure costs totaling $929 million for 2012. Either Arch Coal paid a more reasonable price for the assets acquired through its 2011 purchase of International Coal than did its peers through their respective acquisitions, or perhaps further charges will follow in 2013. Time will tell, but it's worth noting that Arch now carries only $265 million in goodwill on its balance sheet after the fourth-quarter writedown.

Dissecting Arch's operating performance as it relates to the earnings miss, one item that jumps out at me is the company's increased operating cost within the Powder River Basin, or PRB. While operating its assets within that region "at significantly reduced production levels," the company is struggling to defend operating margins as costs creep upward accordingly. For the fourth quarter, Arch's PRB operating margin actually slipped into negative territory at -$0.06 per ton. Even at reduced production rates, the PRB still accounted for 74% of Arch Coal's consolidated production volume, so investors will want to pay close attention to the profitability of that unit going forward.