Monday, February 06, 2023
ARLP is a diversified natural resource company that generates operating and royalty income from coal produced by its mining complexes and royalty income from mineral interests it owns in strategic oil & gas producing regions in the United States, primarily the Permian, Anadarko and Williston basins. ARLP currently produces coal from seven mining complexes its subsidiaries operate in Illinois, Indiana, Kentucky, Maryland and West Virginia. ARLP also operates a coal loading terminal on the Ohio River at Mount Vernon, Indiana. ARLP markets its coal production to major domestic and international utilities and industrial users and is currently the second largest coal producer in the eastern United States. In addition, ARLP is positioning itself as an energy provider for the future by leveraging its core technology and operating competencies to make strategic investments in the fast growing energy and infrastructure transition.
Mark Reichman, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Updating estimates. While our 2023 earnings per unit estimate is unchanged at $5.90, we have made several adjustments in our model resulting in a modest reduction in EBITDA to $1.14 billion from $1.18 billion. Operating, depreciation, depletion and amortization, and general and administration expenses were increased, while net interest expense and income tax expense were lowered. Estimates for certain line items are now more aligned with management guidance.
Attractive total return potential. In our view, the stock price did not respond in line with the partnership’s outstanding fourth quarter and full year 2022 financial results, along with the 40% increase in its quarterly cash distribution per unit to $0.70 or $2.80 on an annualized basis. The indicated distribution rate represents a 12.6% yield based on the recent closing price and an 8.75% yield based on our price target of $32 per unit implying total return potential of greater than 50%.
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This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.