Arch Coal said on Friday its second-quarter profit tripled and topped Wall Street expectations as strong global demand pushed coal prices higher.
The St. Louis company also raised its full-year outlook, and its shares jumped nearly 10 percent in morning trading on the New York Stock Exchange.
"Global markets for coal are incredibly tight," Gordon Howald, analyst with Calyon Securities, said. "Unless oil is going to collapse and coal follows it down, there is a lot of upside in here for coal stocks."
Net income in the quarter rose to $113 million, or 78 cents a share, from $37.6 million, or 26 cents a share, a year ago and above Wall Street's expectations of 64 cents a share.
"Looking ahead, we expect continued solid execution from our Central Appalachian and Western Bituminous segments coupled with improving fundamentals in our Powder River Basin operations," Chief Executive Steven Leer said in a statement.
Midwest flooding disrupted deliveries of Powder River Basin coal in the second quarter.
Revenue in the quarter rose about 30 percent to $785.1 million, driven by higher averages sales prices in all its operating regions.
Analysts on average had forecast revenue of $738.5 million, according to Reuters Estimates.
Coal pricing levels have risen meaningfully across all of Arch's key operating basins in 2008. Since the beginning of the year, steam coal prices for 2009 delivery have more than doubled in Central Appalachia and the Western Bituminous region, while increasing nearly 50 percent in the Powder River Basin, the company said.
Arch Coal raised its full-year 2008 earnings outlook to a range of $2.50 to $2.85 a share, from a prior forecast of $2.40 and $2.80 a share. Wall Street is expecting earnings of $2.64 a share.
Arch Coal also expects sales volumes from company controlled operations of 133 million to 137 million tons, in 2008.
Shares of Arch Coal climbed $5.06 to $56. That compares with a 6 percent increase in the Dow Jones U.S. Coal Index.