Alliance Resource Partners (ARLP) drew fresh attention after reporting third quarter results with higher revenue and net income year over year, updating full year sales tonnage guidance and affirming a quarterly cash distribution.
The latest earnings update landed against a backdrop of steady gains, with Alliance Resource Partners’ share price up 8.85% over the past month and 14.64% year to date. The 1 year total shareholder return of 20.20% and 5 year total shareholder return above 2x suggest momentum has been building over a longer horizon.
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Recent gains hint at investors reacting to Alliance Resource Partners’ latest earnings and guidance, not just chasing sentiment swings. So how does that recent move line up against what the current valuation implies?
Most Popular Narrative: 14% Undervalued
Alliance Resource Partners is framed as undervalued in the most followed narrative, with a fair value of $31.17 against the recent $26.70 close. This puts the spotlight on how its cash generation story supports that gap.
Expanding oil and gas royalties, including over US$1b invested in minerals interests and the increased economic interest in AllDale III and IV to about 61%, positions Alliance Resource Partners for higher royalty volumes and a growing contribution to revenue and EBITDA from a business that has recently reported record quarterly royalty results.
See why 27 investors see Alliance Resource Partners as 14% undervalued.
Result: Fair Value of $31.17 (UNDERVALUED)
Still, the story can break if coal contract prices keep resetting lower, or if further mine level impairments undermine the Alliance Resource Partners earnings base.
Find out about the key risks to this Alliance Resource Partners narrative.
Next Steps
Mixed messages in the Alliance Resource Partners story so far. Act while the details are fresh and weigh both sides of the ledger by reviewing the 4 key rewards and 1 important warning sign
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