Value Play: Cloud Peak Energy

Cloud Peak Energy Inc (CLD) is trading with excellent valuations, especially compared to its industry. The Zacks Consensus Estimates are rising and should be enough to get shares to continue their recent climb.

After a rough start to the year, this Zacks #1 Rank (Strong Buy) is poised for a solid finish and a strong 2011.

Company Description

Cloud Peak is one of the largest coal producers in the U.S. The company owns and operates 3 surface mines in Montana, and Wyoming. Additionally, Cloud Peak has a split interest in a fourth mine.

Well Ahead of Expectations

On Aug 4 Cloud Peak reported second-quarter results that showed that the company is rebounding after issues earlier this year. Customers with plant outages and rail interruptions but a damper on production, but that is turning around.

Earnings per share came in at 51 cents, beating the Zacks Consensus Estimates by 21 cents. However, the year-over-year figures are lower.

Estimates Rising

While the problems from earlier this year are going to impact the overall performance, the Zacks Consensus Estimate is back on the right track. Following the quarterly results the average estimate jumped and is now $1.62, up from $1.16.

Next year’s projections are now calling for $1.74 per share, up 34 cents. These levels are lower than the $2.97 earned in 2009, but rising estimate beget rising share prices.

Good Value

Shares of CLD are trading with a price to book just under 1.2 times, while its industry is averaging 2.3 times. The forward P/E is roughly 11 times, better than its peers.

Cloud Peak is the top rated coal company, and the coal industry is in the top half of areas rank on

The Chart

You can see shares taking a turn lower over the past couple days, which was due to an analyst down grade to neutral. However, that analyst and others have been raising estimates over the past few days, which should prevail in the long run.

Additionally, the analyst considered the most accurate raised the projection to above the consensus, a very bullish sign.

About Bill Wilton 56 Articles

Affiliation: Zacks Investment Research

Bill Wilton is the Growth Stock Strategist for He is also the Editor in charge of the market-beating Zacks Growth Trader service.

Visit: Zacks Investment Research

Be the first to comment

Leave a Reply

Your email address will not be published.