Units of Alliance Holdings GP L.P. (NASDAQ:AHGP) , have been gaining momentum over the last 12 months. This is due to its solid performance in the last four quarters. The partnership recorded an average surprise of 18.04%. It has returned 13.8% over the same period.
Alliance Holdings GP L.P. has its interest in subsidiaries like Alliance Resource Partners L.P (NASDAQ:ARLP) . Apart from that, the partnership is also well poised to benefit from the new administration’s positive regulatory actions, higher natural gas prices and export demand growth. The low cost coal mines operated by its subsidiaries will allow the partnership to meet the challenges even when natural gas price drops.
In the first quarter, coal sales increased 9.2% year over year to $438.8 million. This was primarily due to 28.9% year-over-year increase in coal tons sold, which resulted in $115.9 million in additional coal sales. However, lower average coal sales prices reduced sales by $78.5 million.
The partnership is also working to continue cutting down on unnecessary expenditures. It aims the per ton cost for 2017 to be 7–9% lower than the 2016 level. This will marginally offset the expected decline in coal prices in the range of 11–12% per ton from 2016 levels.
The improvement in demand for coal is likely to increase shipment in 2017. Alliance Holdings GP L.P expects 835,000 tons of coal to be shipped into the export markets over the remaining part of 2017. This will further boost its performance.
The U.S Coal industry is highly competitive, with the existence of operators like Arch Coal Inc. (NYSE:ARCH) and CONSOL Energy Inc. (NYSE:CNX) . Alliance Holdings GP L.P. a Zacks Rank #1 (Strong Buy) stock continues to keep a competitive edge through well-spread low cost mines in different regions. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for the partnership has moved up 13.7% to $3.16 for 2017 and 7.8% to $2.91 for 2018 in the last 90 days. The domestic demand of coal and improving export volumes are expected to drive growth for the partnership.
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