Fording Coal (FDG ) Earnings Preview

Potential secondary plays: ACI, ANR, BTU, CNX, FCL, MEE, WLB...

Fording Coal (FDG) is set to report Q4 results 02/11 after the close. There is only one analyst estimate which expects revenue of $380 mln and EPS of $0.52. The co has a mixed record relative to expectations as the co beat last qtr, but missed twice before that. It can be tricky to get a handle on FDG because it's a trust. It is an open-ended mutual fund and does not carry on any active business. The Trust owns all of the interests of Fording LP, which holds a 60% interest in Elk Valley Coal Partnership. The Trust uses the cash it receives from its investments to make quarterly distributions to its unitholders. Each qtr, the co reports cash available for distribution. As such, it's a bit difficult to get a handle on the financials...

Recent Price Action: The stock has been surging over the past few weeks, up 40%. In fact, the entire coal sector has been making a strong move on due to healthy demand, driven in large part by demand from China which is facing a shortage of coal. Also, floods in Australia have squeezed an already-tight coal market.

Key Commentary: In its Q3 report, the co said that hard coking coal markets appear to be robust, however if the Canadian dollar remains at current levels, substantial increases in the US dollar coal price will be required to avoid significant reductions in its margins....