Arch Resources, Inc. (ARCH) | Investment Case

1. Company Snapshot

1.a. Company Description

Arch Resources, Inc.produces and sells thermal and metallurgical coal from surface and underground mines.As of December 31, 2021, the company operated seven active mines.

It also owned or controlled primarily through long-term leases approximately 28,292 acres of coal land in Ohio; 952 acres of coal land in Maryland; 10,095 acres of coal land in Virginia; 306,033 acres of coal land in West Virginia; 81,470 acres of coal land in Wyoming; 234,543 acres of coal land in Illinois; 33,047 acres of coal land in Kentucky; 362 acres of coal land in Montana; 248 acres of coal land in Pennsylvania; and 19,018 acres of coal land in Colorado, as well as smaller parcels of property in Alabama, Indiana, Washington, Arkansas, California, Utah, and Texas.The company sells its products to utility, industrial, and steel producers in the United States, Europe, Asia, Central and South America, and Africa.The company was formerly known as Arch Coal, Inc.

and changed its name to Arch Resources, Inc.in May 2020.Arch Resources, Inc.

was incorporated in 1969 and is headquartered in St. Louis, Missouri.

Show Full description

1.b. Last Insights on ARCH

Here is a 90-word analysis of the negative drivers behind Arch Resources' recent stock performance: Arch Resources' recent performance was negatively driven by the company's proposed sale to CONSOL Energy and the pending merger's uncertainty. The company's Q1 earnings were hurt by the proposed transaction's price and process investigation. Additionally, the company's legal issues, including the investigation by the Former Attorney General of Louisiana, weighed on the stock. The company's weak Q1 earnings and the negative impact of the proposed sale also contributed to the stock's decline.

1.c. Company Highlights

Last Price	134.83
Change Percentage	0.70%
Open	133.19
Previous Close	133.89
Market Cap ( Millions)	2442
Volume	3750989
Year High	187.6
Year Low	116.44
M A 50	154.71
M A 200	149.6

FCF Yield	0.11%
Dividend Yield	0.00%
ROE	0.60%
Debt / Equity	8.79%
Net Debt / EBIDTA	-101.15%
Price To Book	1.69
Price Earnings Ratio	283.33
Price To FCF	921.0
Price To sales	1.99
EV / EBITDA	25.63

2. Transcript Summary

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3. NewsRoom

Arch Reinsurance Group Promotes William Soares, Pierre Jal and David Seyller

Jun -03

Source: businesswire.com

Arch Resources and CONSOL Energy Announce Stockholder Approvals in Respect of Pending Merger

Jan -09

Source: prnewswire.com

Maplebear Set to Join S&P MidCap 400; Enovis to Join S&P SmallCap 600

Jan -07

Source: prnewswire.com

ARCH RESOURCES INVESTOR ALERT by the Former Attorney General of Louisiana: Kahn Swick & Foti, LLC Investigates Adequacy of Price and Process in Proposed Sale of Arch Resources, Inc. - ARCH

Dec -06

Source: businesswire.com

Why Is Arch Resources (ARCH) Down 1.2% Since Last Earnings Report?

Dec -05

Source: zacks.com

Arch Resources: Another Attractive Coal Company

Nov -07

Source: seekingalpha.com

Arch Resources, Inc. (ARCH) Q3 2024 Earnings Call Transcript

Nov -05

Source: seekingalpha.com

Arch Resources Q3 Earnings Lag Estimates, Revenues Beat

Nov -05

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.63%)

6. Segments

Metallurgical

Expected Growth: 4.65%

Metallurgical segment growth of 4.65% driven by increasing global steel production, rising demand for high-quality metallurgical coal, and Arch Resources' strategic expansion into premium metallurgical coal markets, coupled with operational efficiencies and cost savings initiatives.

Thermal

Expected Growth: 4.6%

Thermal coal from Arch Resources, Inc. is driven by increasing demand from utilities, particularly in the Midwest and Rocky Mountains, as well as rising natural gas prices, which make coal a more competitive option. Additionally, Arch's low-cost operations and strategic transportation network enable the company to capitalize on growing export markets.

7. Detailed Products

Metallurgical Coal

High-quality metallurgical coal used in the production of steel

Thermal Coal

Coal used to generate electricity in power plants

Coking Coal

Specialized coal used in the production of coke, a key ingredient in steel production

PCI Coal

Pulverized coal injection coal used in blast furnaces to improve efficiency

8. Arch Resources, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Arch Resources, Inc. is medium due to the availability of alternative energy sources such as renewable energy and natural gas.

Bargaining Power Of Customers

The bargaining power of customers for Arch Resources, Inc. is low due to the company's diversified customer base and lack of concentration.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Arch Resources, Inc. is medium due to the company's dependence on a few key suppliers for equipment and materials.

Threat Of New Entrants

The threat of new entrants for Arch Resources, Inc. is low due to the high barriers to entry in the coal mining industry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry for Arch Resources, Inc. is high due to the competitive nature of the coal mining industry, with many established players competing for market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	8.89%
Debt Cost	7.42%
Equity Weight	91.11%
Equity Cost	7.42%
WACC	7.42%
Leverage	9.76%

11. Quality Control: Arch Resources, Inc. passed 9 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Alliance Resource Partners

A-Score: 7.4/10

Value: 8.6

Growth: 4.8

Quality: 7.1

Yield: 10.0

Momentum: 5.5

Volatility: 8.7

1-Year Total Return ->

Natural Resource Partners

A-Score: 6.8/10

Value: 4.2

Growth: 5.6

Quality: 7.7

Yield: 9.0

Momentum: 6.5

Volatility: 8.0

1-Year Total Return ->

Chord Energy

A-Score: 6.5/10

Value: 8.1

Growth: 8.1

Quality: 5.1

Yield: 10.0

Momentum: 1.5

Volatility: 6.0

1-Year Total Return ->

Arch Resources

A-Score: 5.1/10

Value: 4.3

Growth: 7.3

Quality: 4.6

Yield: 5.0

Momentum: 3.5

Volatility: 5.7

1-Year Total Return ->

Peabody Energy

A-Score: 4.3/10

Value: 6.4

Growth: 3.8

Quality: 5.0

Yield: 1.0

Momentum: 6.5

Volatility: 3.3

1-Year Total Return ->

CONSOL Energy

A-Score: 4.0/10

Value: 5.8

Growth: 6.3

Quality: 4.9

Yield: 1.0

Momentum: 1.5

Volatility: 4.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-7.11%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.42%

Arch Resources, Inc. - US03940R1077

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on ARCH

1.c. Company Highlights

Higher Yield

Strong Momentum

Average Quality

Earnings Miss

Revenues Beats

Average Growth

Average Yield

Higher Growth

Stable Momentum

Weak Momentum

Medium Volatility

Less Volatile

Expensive

2. Transcript Summary

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.63%)

6. Segments

Metallurgical

Expected Growth: 4.65%

Thermal

Expected Growth: 4.6%

7. Detailed Products

Metallurgical Coal

Thermal Coal

Coking Coal

PCI Coal

8. Arch Resources, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Arch Resources, Inc. passed 9 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

134.83$

Current Price

134.83$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA