2024-04-30 12:53:57 ET
Summary
- Alliance Resource Partners, the largest coal producer in the eastern U.S., offers attractive value with a P/CF of 5.6x and a dividend yield of 13%.
- Despite regulatory risks and the overall skepticism against coal, ARLP's low multiple and strong cash flow (including from royalties) provide a strong margin of safety.
- Q1 2024 earnings report confirms ARLP's robust performance, with increased EBITDA and a commitment to meet ambitious 2024 guidance.
- In this article, I contextualize ARLP's Q1'24 performance with my previous bull thesis and explain why I remain bullish here.
Early March this year, I issued a bullish thesis on Alliance Resource Partners, L.P. ( ARLP ), which is the largest coal producer in the eastern U.S. It is also worth noting that ARLP's business is not only about coal, but also increasingly about revenue generation from mineral and royalty interests in strategic oil & gas basins (albeit this share is relatively minor as of now)....
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Alliance Resource Partners: 1Q24 Earnings Confirm That The Value Is Durable