The third quarter is shaping up to be a bright one for Arch Coal (ACI): The company said early Monday that it is looking for adjusted earnings before interest, taxes, depreciation and amortization of $70 million to $74 million, easily above the $67 million consensus.
It also said it held $1.05 billion in cash and short-term investments at the end of the quarter, an improvement from the $990 million in held at the end of June. Its available liquidity totaled $1.3 billion.
FBR Capital Markets' Mitesh Thakkar and Chase White reiterated an Outperform rating, noting that investors should like the updated guidance. They also write that the balance sheet update is a "positive given the concerns many investors have had surrounding Arch Coal's liquidity in recent months."
Citigroup's Brian Yu was less enthusiastic. He writes that Arch's liquidity progress "is probably due to good working capital management," but that "the EBITDA improvement is still not enough to cover reported interest expense that averages $95 million per quarter."
The stock was trending higher in premarket, but lost most of its gains not long after the open. It rebounded after 10, and was up 0.7% at recent check. Other names in the sector were still benefitting as well, with Alpha Natural Resources (ANR) up 1.2%, and Peabody Energy (BTU) and Walter Energy (WLT) both up more than 3%.
Arch Coal reports full earnings of Oct. 28.