CEIX - Arch makes the case for higher multiple in the coal sector during Q1 call

Arch (ARCH) posted strong Q1 results, despite significant rail challenges. Though the company expects improved transport to drive accelerating profitability as 2022 progresses, management also highlighted several factors that could improve the company's (and sector) multiple. Long term demand for thermal coal is emerging domestically and internationally. The company is allocating excess free cash flow to reducing share count. Both while high natural gas prices, and under-investment in the sector, result in record profits.  Ahead of Tuesday's results, Arch (ARCH) was expected to generate $61 per share in earnings during 2022. The shares closed Monday at $131, a bit more than 2x expected 2022 earnings. And that low multiple despite Arch (ARCH) generating the vast majority of its EBITDA from the secularly-stable metallurgical coal segment.  Ahead of Q1 coal earnings results, investors were focused on the ability for management teams to capture long-term value from current dislocations in energy markets. Arch

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Arch makes the case for higher multiple in the coal sector during Q1 call