Why Arch Coal Dropped Like a Rock

Is this meaningful or just another movement?

Travis Hoium
Travis Hoium
Feb 5, 2013 at 5:45PM
Energy, Materials, and Utilities

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of coal miner Arch Coal (NASDAQOTH:ACIIQ) fell 12% today after reporting earnings.

So what: Fourth0quarter revenue fell 21% to $968.2 million, still below the $999.2 million analysts expected. The company lost $295.4 million, or $1.39 per share, but when adjusted for one-time items the loss falls to $0.42, still below the $0.17 Wall Street expected.  

Now what: Regular readers know that I haven't been a fan of coal stocks for some time, and this is exactly why. Low-cost natural gas is fighting coal domestically, countries like China are mining their own coal as fast as they can, and even metallurgical coal has seen a drop in prices. I don't see any reason to get bullish now, and the better question might be, How long can Arch Coal survive?

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