ARCH COAL, INC.

(ACI-N)
Fossil Fuels / Coal / Coal
Verus Opinion
Buy
Hold
Sell
The Verus Opinion, provided by Verus Analytics Inc, is
an empirically-derived and historically back-tested stock
rating system with buy, sell, and hold opinions. To
develop a rating the quantitative system analyzes a firm's
earnings quality, balance sheet, and income statement,
conducts technical and valuation analysis and evaluates
the transactions made by the company's management
and directors (i.e. insiders).
Verus Analytics, Inc is a private independent research
firm specializing in engineering institutional rating
systems.
Analyst Recommendations
First Call Mean (FC):
Hold (29 firms)
Sell Reduce Hold Buy Strong
Buy
FC
First Call Mean (FC) is the mean recommendation of all
analysts covering the stock.
Key Information
Price (12/21/12) (USD) 7.31
52-Week High (USD) 15.99
52-Week Low (USD) 5.16
Market Cap (USD) 1.6B
Avg Daily Vol 10.6M
Exchange NEW YORK
Dividend Yield 1.6%
Annual Dividend (USD) 0.12
Trailing PE 9.9
LTG Forecast -3.3%
Exp Report Date 02/04/13
Annual Revenue (USD) 4.4B
ROE -9.5%
Inst. Ownership 74.9%
1-Mo Return 12.3%
3-Mo Return 5.2%
1-Yr Return -50.6%
1-Year Price Chart 5-Year Price Chart
Business Description
Arch Coal, Inc. (Arch) is a coal producer. During the year ended December 31,
2011, the Company sold approximately 156.9 million tons of coal, including
approximately 5.5 million tons of coal it purchased from third parties, representing
roughly 14% of the United States coal supply. It sells its coal to power plants,
steel mills and industrial facilities. As of December 31, 2011, it operated, or
contracted out the operation of, 46 active mines located in coal-producing regions
of the United States. The Company operates in three business segments: the
Powder River Basis (PRB) segment, with operations in Wyoming; the Western
Bituminous (WBIT) segment, with operations in Utah, Colorado and southern
Wyoming; the Appalachia (APP) segment, with operations in West Virginia,
Kentucky, Maryland and Virginia; and its Other segment, which includes its
operations in Illinois. On June 15, 2011, the Company acquired International Coal
Group, Inc.
Page 1 of 6
2012 Thomson Reuters. All rights reserved.
Thomson Reuters Company in Context Report
Updated December 24, 2012
Please refer to the last page for important disclaimer and certification information
Peer Analysis
Ticker
Verus
Opinion
Price
(12/21/12)
(USD)
Market
Cap
(USD)
Dividend
Yield
Trailing
P/E
Forward
P/E
LTG
Forecast
Annual
Revenue
(USD)
Net
Margin
1-Mo
Return
3-Mo
Return
1-Yr
Return
PVR Hold 25.99 2.5B 8.3% 17.9 16.8 3.9% 1.0B 5.1% 11.8% 3.6% 2.6%
ARLP -- 58.06 2.1B 7.5% 9.4 8.9 1.4% 2.0B 6.5% 1.4% -8.6% -23.6%
WLT Hold 34.23 2.1B 1.5% 5.9 38.3 8.5% 2.6B -173.5% 18.7% -2.0% -45.5%
ANR Hold 9.28 2.0B -- -- -- 5.0% 7.5B -2.8% 29.4% 28.7% -53.6%
NRP Hold 17.78 1.9B 12.4% 13.9 10.1 1.0% -- 54.1% -3.9% -19.7% -30.2%
ACI Buy 7.31 1.6B 1.6% 9.9 -- -3.3% 4.4B 4.2% 12.3% 5.2% -50.6%
CLD Buy 19.58 1.2B -- 6.3 11.2 -27.4% 1.5B 20.0% 0.6% 7.2% -2.2%
HNRG Buy 8.36 237M -- 8.7 10.0 -- 136M 17.1% 0.2% 4.5% -16.4%
RNO Hold 13.44 206M 13.2% 8.7 14.4 -- 366M 5.1% -7.4% -15.9% -30.8%
WLB Buy 10.01 142M -- -- -- -- 571M 4.7% 11.6% 4.3% -18.0%
JRCC Hold 3.47 125M -- -- -- -- 1.2B -7.1% 44.6% 16.1% -47.6%
Average -- -- 1.3B 7.4% 10.1 15.7 -1.6% 2.1B -6.0% 10.8% 2.1% -28.7%
Median -- -- 1.6B 7.9% 9.1 11.2 1.4% 1.4B 5.1% 11.6% 4.3% -30.2%
Peer Group
PVR PVR PARTNERS LP
ARLP ALLIANCE RESOURCE
WLT WALTER ENERGY
ANR ALPHA NATURAL RESRC
NRP NATURAL RESOURCE PAR
CLD CLOUD PEAK ENERGY
HNRG HALLADOR PETROLEUM
RNO RHINO RESOURCE PARTNERS
WLB WESTMORELAND COAL CO
JRCC JAMES RIVER COAL CO
Earnings Highlights
-
Over the past 4 quarters, the company has reported 2 positive
(>2%), 2 negative (<-2%), and 0 in-line (within 2%) surprises. The
average surprise for this time period has been 8.8%. Most recently
on 10/26/12, the company reported quarterly earnings of -0.06 per
share, a positive surprise of 62.7% above the consensus of -0.16.
-
ACI's current quarter consensus estimate has increased over the
past 90 days from -0.15 to -0.15, a gain of 4.0%. This improvement
is significantly greater than its Industry average of -10.0% during the
same time period.
-
During the past four weeks, analysts covering ACI have made 1
upward and 5 downward EPS estimate revisions for the current
quarter.
Analyst Recommendations
First Call Mean (FC):
Hold (29 firms)
Sell Reduce Hold Buy Strong
Buy
FC
Distribution
Analysts typically rate a stock based on a five-tier scale ranging
from 'Strong Buy' to 'Sell'. The chart below displays the number
of analysts in each tier.
Strong Buy
Buy
Hold
Reduce
Sell
4
8
11
4
2
Price Target
The chart below indicates where analysts predict the stock
price will be within the next 12 months, as compared to the
current price. The high, low, and mean price targets are
presented.
18
15
12
9
6
3
Current Price 12-Month Price Target
7.31 Mean
High
Low
12-Month Price Target
Mean (USD) 8.88
High (USD) 15.00
Low (USD) 3.50
Target vs.
Current
21.5%
# of Analysts 20
Mean Estimate Trend
Q
12-12
Q
03-13
Y
2012
Y
2013
Price
Target
Current (USD) -0.15 -0.27 -0.35 -0.76 8.88
30 Days Ago (USD) -0.14 -0.24 -0.35 -0.71 8.98
90 Days Ago (USD) -0.15 -0.18 -0.44 -0.46 9.50
% Change - Last 90 Days 4.0% -48.4% 20.1% -64.7% -6.5%
Next Expected Report Date: 02/04/13
Page 2 of 6
2012 Thomson Reuters. All rights reserved.
Thomson Reuters Company in Context Report
Updated December 24, 2012 for ACI
Earnings Per Share
Earnings per share (EPS) is calculated by dividing a company's earnings
by the number of shares outstanding. Analysts tend to interpret a pattern
of increasing earnings as a sign of strength and flat or falling earnings as
0.40
0.20
0.00
-0.20
-0.40
-0.60
12/11 03/12 06/12 09/12 12/12 03/13
Quarterly
Actuals Estimates
0.29
-0.04
-0.10
-0.06
Mean
High
Low
Estimates 12-12 03-13
FC Mean (USD) -0.15 -0.27
High (USD) 0.00 -0.15
Low (USD) -0.41 -0.41
# of Analysts 27 13
NA = No Actual or Estimated EPS
a sign of weakness. The charts below provide a comparison between
a company's actual and estimated EPS, including the high and low
forecasts.
3.00
2.00
1.00
0.00
-1.00
-2.00
2010 2011 2012 2013
Annual
Actuals Estimates
0.98
1.07
Mean
High
Low
Estimates 2012 2013
FC Mean (USD) -0.35 -0.76
High (USD) -0.27 -0.25
Low (USD) -0.49 -1.76
# of Analysts 15 28
NA = No Actual or Estimated EPS
Earnings Surprise
Investors frequently compare a company's actual earnings
to the mean expectation of professional analysts.
The difference between the two is referred to as a "positive" or "negative" surprise.
Academic research has shown that when a company reports a surprise, it is often followed
by more of the same surprise type.
Surprise Summary - Last 12 Quarters
Surprise Type # %
Positive Quarters (> 2%) 4 33.3%
Negative Quarters (< -2%) 8 66.7%
In-Line Quarters (within 2%) 0 --
Surprise Detail - Last 6 Periods
Surprise
Type
Announce
Date
Period End
Date
Actual
EPS
(USD)
Mean
EPS
(USD)
Surprise
(%)
POSITIVE 10/26/12 09/12 -0.060 -0.161 62.7%
POSITIVE 07/27/12 06/12 -0.100 -0.181 44.8%
NEGATIVE 05/01/12 03/12 -0.040 0.161 -124.8%
NEGATIVE 02/10/12 12/11 0.290 0.321 -9.7%
NEGATIVE 10/28/11 09/11 0.080 0.118 -32.2%
NEGATIVE 07/29/11 06/11 0.440 0.597 -26.3%
Annual Revenue
A pattern of increasing sales in conjunction
with a rising EPS may influence a buy
recommendation, while flat or falling sales
and faltering earnings may explain a sell
recommendation. A rising EPS with flat or
falling sales may result from increased cost
efficiency and margins, rather than market
expansion. This chart shows the revenue
forecast trend of all analysts and the highest
and lowest projections for the current and
next fiscal year.
4.8B
4.4B
4.0B
3.6B
3.2B
2.8B
2010 2011 2012 2013
Actuals Estimates
3.2B
4.3B
Mean
High
Low
2012 2013
Mean (USD) 4.2B 4.0B
High (USD) 4.3B 4.6B
Low (USD) 3.9B 3.1B
Forecasted
Growth
-2.5% -6.0%
# of Analysts 24 24
NA = No Actual or Estimated Revenue
Fundamental Highlights
- Of the 18 firms within the Coal Industry, ARCH COAL, INC. is among
the 7 companies that pay a dividend. The stock's dividend yield is
currently 1.6%.
- The company's days sales in inventory has been higher than its
Industry average for each of the past five years.
- The company's current ratio has been lower than its Industry
average for each of the past five years.
Page 3 of 6
2012 Thomson Reuters. All rights reserved.
Thomson Reuters Company in Context Report
Updated December 24, 2012 for ACI
Fundamental Metrics
Profitability
ACI
Industry
Avg
Revenue Growth 13.6% 9.6%
For year over year
ending 09/12
Gross Margin 5.9% 15.8%
For trailing 4 qtrs
ending 09/12
Return on Equity -9.5% 11.4%
For trailing 4 qtrs
ending 09/12
Net Margin 4.2% 4.9%
For trailing 4 qtrs
ending 09/12
Debt ACI
Industry
Avg
Current Ratio 2.0 1.5
For year over year
ending 09/12
Debt-to-Capital 51.2% 51.5%
For trailing 4 qtrs
ending 12/11
Interest Funding 85.5% 0.0
For trailing 4 qtrs
ending 09/12
Interest Coverage 1.8 2.9
For trailing 4 qtrs
ending 09/12
Dividend ACI
Industry
Avg
Div. Growth Rate -33.3% 5.3%
For year over year
ending 09/12
Dividend Funding 16.7% 0.0%
For trailing 4 qtrs
ending 09/12
Dividend Coverage 8.9 6.5
For trailing 4 qtrs
ending 12/11
Current Div. Yield 1.6% 0.0%
For trailing 4 qtrs
ending 12/12
The time period stated applies to the company-level data only. The Industry Average is a simple average of the most recent data from companies
whose businesses most closely match each other.
Risk Highlights
- On days when the market is up, ACI shares tends to outperform the
S&P 500 index. However, on days when the market is down, the
shares generally decrease by more than the S&P 500 index.
- In both short-term and long-term periods, ACI has shown high
correlation (>=0.4) with the S&P 500 index. Thus, this stock would
provide only low levels of diversification to a portfolio similar to the
broader market.
- Over the last 90 days, ACI's Standard Deviation has been 4.4 while
that of the S&P 500 index has been 0.8.
Risk Metrics
Standard Deviation
Last 90 Days 4.42
Last 60 Months 17.06
Intra-Day Swing
Last 90 Days Avg 5.6%
Last 90 Days Largest 13.0%
Beta vs. S&P 2.52
Positive Days Only 2.34
Negative Days Only 1.68
Beta vs. Group 1.84
Positive Days Only 2.22
Negative Days Only 1.40
Correlation vs. S&P
Last 90 Days 50%
Last 60 Months 58%
Correlation vs. Group
Last 90 Days 84%
Last 60 Months 88%
Price Analysis: Risk and Reward
Last 90 Days Last 60 Months Last 10 Years
Ticker
Best
Daily
Return
Worst
Daily
Return
#
Days
Up
#
Days
Down
Largest
Intra-Day
Swing
Best
Monthly
Return
Worst
Monthly
Return
Average
December
Return
Average
January
Return
Average
February
Return
ACI 15.7% -12.5% 30 30 13.0% 33.4% -39.4% 6.9% -4.3% 1.3%
S&P 500 2.0% -2.4% 34 28 2.9% 10.8% -16.9% 1.3% -1.2% -0.1%
Price Performance
Daily closing pricing data is used to calculate the price performance of a
stock over five periods. The performance of the S&P 500 is also
displayed as a means of comparison.
1 Week
1 Month
3 Month
YTD
1 Year
-4.6%
1.2%
12.3%
2.8%
5.2%
-2.1%
-49.6%
13.7%
-50.6%
15%
ACI
S&P 500
ACI
(USD)
S&P 500
Close Price (12/21/12) 7.31 1430
52-Week High 15.99 1466
52-Week Low 5.16 1250
- On 12/21/12, ACI closed at 7.31, 54.3% below its 52-week high and
41.7% above its 52-week low.
- ACI shares are currently trading 1.1% below their 50-day moving
average of 7.39, and 2.6% below their 200-day moving average of
7.50.
- The S&P 500 is currently 2.4% below its 52-week high and 14.4%
above its 52-week low.
Relative Strength Indicator
(scale 1-100, 100 being best)
Last 1 Month 51
Last 3 Months 49
Last 6 Months 46
Page 4 of 6
2012 Thomson Reuters. All rights reserved.
Thomson Reuters Company in Context Report
Updated December 24, 2012 for ACI
Valuation Multiples
Trailing
P/E
Forward
P/E
Forward
PEG
ACI 9.9 -- --
S&P 500 22.6 17.2 1.7
Company Relative to Its 5-Yr Average 67% Discount -- --
Company Relative to S&P 500 56% Discount -- --
Trailing PE
Trailing P/E is calculated using the most recent
closing price (updated weekly) divided by the
sum of the four most recently reported quarterly
earnings.
Forward PE
Forward P/E is calculated using the most recent
closing price (updated weekly) divided by the
sum of the four upcoming quarterly consensus
estimates.
Forward PEG
Forward PEG is calculated by dividing the
Forward P/E by the five-year, long term
forecasted growth rate.
Insider Purchases and Sells (Most recent transactions within the past 90 days)
No transactions for ACI in the past 90 days.
Seasonal Sells - Quarterly & Yearly
Time-series data for each quarter over the past three years allows you
to easily analyze the longer-term trend in open-market insider selling.
Q1
(USD)
Q2
(USD)
Q3
(USD)
Q4
(USD)
Full Year
(USD)
2012 4.91M 0 0 0 4.91M
2011 1.26M 0 0 1.52M 2.78M
2010 0 0.02M 0.15M 5.18M 5.35M
2009 0 0 0 0 0
Seasonal Buys - Quarterly & Yearly
Time-series data for each quarter over the past three years allows you
to easily analyze the longer-term trend in open-market insider buying.
Q1
(USD)
Q2
(USD)
Q3
(USD)
Q4
(USD)
Full Year
(USD)
2012 0.11M 0.04M 0 0 0.15M
2011 0.03M 0 0.74M 0.01M 0.79M
2010 0 0.02M 0 0 24,516
2009 0.02M 0 0 0 24,541
Institutional Holders (Updated weekly as of 12/22/12)
The top five institutional holders are presented based on the total
number of shared held.
Institution
Inst.
Type
# Shares
Held
Reported
Date
Barclays Global Investors, ... Inv Mgmt 14.7M 09/30/12
Tradewinds Global Investors... Inv Mgmt 14.0M 09/30/12
Vanguard Group, Inc. Inv Mgmt 11.3M 09/30/12
State Street Global Advisor... Inv Mgmt 11.2M 09/30/12
Schneider Capital Managemen... Inv Mgmt 8.66M 09/30/12
Top Executive Holders (Updated monthly as of 12/16/12)
The top five insider holders are presented based on the total number of
direct holdings. Indirect holdings are excluded. *Please see last page
for role code legend.
Insider Name * Role
# Direct
Shares
Value
(USD)
Reported
Date
Eaves, John W P 0.12M 0.91M 03/15/12
Boyd, James R D 0.10M 0.78M 08/08/11
Lang, Paul A O 66,416 0.51M 12/20/11
Potter, Robert Gene D 36,000 0.28M 08/19/11
Peugh, David B O 35,763 0.27M 02/28/11
Page 5 of 6
2012 Thomson Reuters. All rights reserved.
Thomson Reuters Company in Context Report
Updated December 24, 2012 for ACI
Distribution of Investment Ratings
As of 12/21/2012, Verus Analytics covered 4287
companies, with 18.7% rated Buy, 65.2% rated Hold, and
16.1% rated Sell. Verus Analytics does not engage in
investment banking services.
Disclaimer
All information in this report is assumed to be accurate to
the best of our ability. Past performance is not a
guarantee of future results. The information contained in
this report is not to be construed as advice and should
not be confused as any sort of advice. Thomson
Reuters, its employees, officers or affiliates, in some
instances, have long or short positions or holdings in the
securities or other related investments of companies
mentioned herein. Investors should consider this report
as only a single factor in making their investment
decision.
Role Legend
AF Affiliate
B Benef Owner
CB Chairman
CEO CEO
CFO CFO
CM Committee Member
CO COO
CT CTO
D Director
EVP Exec VP
GC Gen Counsel
O Officer
OH Other
P President
R Retired
SH Shareholder
SVP Sr VP
T Trustee
TR Treasurer
VC Vice Chairman
VP VP
Investment Methodology
Verus Analytics, Inc (Verus) is a private firm specializing
in engineering rating systems for institutional clients,
wealth managers and self-directed investors. Verus's
exhaustive list of ratings include MSN Money's
StockScouter, and numerous institutional stock rating
systems. Verus also provides proprietary ratings of
earnings quality, fundamental and valuation elements
directly to institutional clients. Verus (previously
Camelback Research Alliance, Inc and the quantitative
business unit of Gradient Analytics, Inc) was founded in
1996 by two former tenured professors, Dr. Carr Bettis
and Dr. Donn Vickrey. Today the core team consists of
financial engineers, business analysts and technology
personnel.
The Verus Opinion is an empirically-derived and
historically backtested stock rating system with buy, sell
and hold opinions. To develop a rating, the quantitative
system analyzes a firm's earnings quality, balance sheet,
and income statement, conducts technical and valuation
analysis, and evaluates the transactions made by the
company's management and directors (i.e. insiders).
Page 6 of 6
2012 Thomson Reuters. All rights reserved.
Thomson Reuters Company in Context Report
Updated December 24, 2012 for ACI