Arch Coal Earnings Report Offers Boost to Entire Battered Coal Sector (ACI, BTU, JRCC, KOL)

Arch Coal Inc. (NYSE: ACI) is getting a huge boost after its earnings, and we would look for secondary and tertiary moves in the coal sector based upon this report. The coal giant reported a loss that was “less bad” than expected. Earnings were -$0.10 per share outside of items, better than the -$0.18 EPS expected. Revenues managed to rise by almost 8% to $1.06 billion, and that was above the consensus of about $1.0 billion.

The company remains cautious due to the continued uncertainties in the global macroeconomic environment. That has it lowering the 2012 metallurgical coal sales expectations to approximately 7.5 million tons. The company is managing the variables and responding to competitive dynamics in the market. What is interesting is that the company also said that it is positioning itself for the inevitable rebound and it somehow expects better balance in the second half of the year in the domestic thermal market and also higher U.S. exports.

Arch Coal now sees 2012 thermal sales volume of 128 to 134 million tonnes and 7.5 million tons of met coal. It has lowered met coal volume expectations to 7.5 million, down from 8.0 to 8.5 million.

Arch Coal’s shares are surging this morning. Shares are up 14% at $6.00, but the 52-week range of $5.16 to $26.50 shows just how bad things have been here. Peabody Energy Corp. (NYSE: BTU) is up almost 3% at $20.22 in premarket trading, versus a 52-week range of $18.78 to $58.78. James River Coal Co. (NASDAQ: JRCC) is very active and shares are up almost 8% at $1.92, versus a 52-week range of $1.68 to $19.58.

The Market Vectors Coal ETF (NYSEMKT: KOL) is indicated higher so far this morning on the news. It closed at $21.92 on Thursday against a 52-week range of $21.92 to $49.75.

JON C. OGG