U.S. coal stocks have been almost universally pasted, and it's not
hard to see why. Many price indexes have carved out new lows, and EBITDA
has shrunk to a point where many companies are in a tight squeeze with
respect to interest and debt payments. Worse still, there are signs that
several key markets may be changing (or have already changed) in ways
that fundamentally alter the long-term outlook for U.S. coal producers.
Arch Coal (NYSE:ACI)
is one of the companies that finds itself in a tricky spot. While the
company should have adequate liquidity for several more years, that
liquidity won't last indefinitely, and this is one of the companies
potentially at risk from fundamental changes to the markets it has
served for so many years. Arch Coal does offer impressive leverage to
any near-term recovery in coal prices, akin to what investors have seen
with some of the more leveraged and commoditized energy service
companies lately, but this is by no means a safe play on a troubled
sector.
Continue reading via this link:
Arch Coal Holding On For An Appalachian-Driven Rebound
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