MEE Massey Energy Co.

Coal miner Arch Coal Inc. (ACI) continues to expand its presence in the Asia-Pacific region with the opening of its subsidiary in Singapore. Arch Coal’s new subsidiary will operate by the name Arch Coal Asia-Pacific Pte. Ltd.

Arch Coal said that the countries in the Asia-Pacific region are riding a coal market supercycle. With a wide presence in the growing Asia-Pacific region, Arch Coal expects to extend its reach and seize new market opportunities as developing countries have a growing demand for energy.

Arch Coal Asia-Pacific Pte. Ltd. will be led by Renato Paladino as the president of the unit. Paladino will be responsible for Asia-Pacific’s regional business development, marketing and sales of thermal and metallurgical products, and regional supply chain expansion. Paladino will report to Arch's president and chief operating officer, John W. Eaves.

U.S.-based Arch Coal is one of the world's largest and most efficient coal producers, with more than 160 million tons of coal sold in 2010. Arch's national network of mines supplies cleaner-burning and low-sulfur coal to customers in four continents, which include U.S. and international power producers and steel manufacturers.

Based in St. Louis, Missouri, Arch Coal surpassed the Zacks Consensus revenue and earnings per share expectations during the first quarter of 2011. The company reported net adjusted earnings of 36 cents per share and revenue of $872.9 million, which beat the Zacks Consensus Estimates by 4 cents and $41.9 million, respectively. This outperformance was fueled by the company’s strong sale of the high variety metallurgical coal in the quarter.

Going forward, Arch expects continued strength in global coal market fundamentals during 2011. The company believes the robust metallurgical coal demand and resurgent seaborne steam coal demand should draw the available supply out of domestic coal markets, which would lead to substantial increases in U.S. coal exports this year.

Given the scenario of robust coal demand in the international markets, we expect the company to achieve its revised earnings and sales targets for 2011. Arch Coal now expects 2011 earnings in the range of $2.10 and $2.60 per share with sales in the 155 - 160 million ton range, comprising metallurgical coal sales of 7.5 million tons. The Zacks Consensus earnings estimates for the second quarter, fiscal 2011 and fiscal 2012 stand at 62 cents, $2.50 and $3.89 per share, respectively.

Arch Coal currently retains a Zacks #3 Rank (short-term Hold rating), which supports our long-term Neutral recommendation on the stock. The short term rating of the company is at par with its closest peers CONSOL Energy Inc. (CNX) and Massey Energy Co. (MEE), who also carry a Zacks #3 Rank.

 
ARCH COAL INC (ACI): Free Stock Analysis Report
 
CONSOL ENERGY (CNX): Free Stock Analysis Report
 
MASSEY EGY CPY (MEE): Free Stock Analysis Report
 
Zacks Investment Research