The coal industry remains a major supplier to key industries such as steel and utilities through large numbers of coal-fired electricity plants. It remains a dominant energy supplier despite growing global awareness of climate change and moves to reduce the use of the coal, one of the world's most plentiful fossil fuels. Companies like Arch Resources Inc. (ARCH) and Teck Resources Ltd. (TECK) mine, process, and distribute coal for electricity generation. Coal prices have declined substantially since early 2019 and dropped precipitously in March. Though they have recovered somewhat, businesses across the industry have struggled. Over the 12-month trailing period, coal stocks have dramatically underperformed the market, as represented by the VanEck Vectors Coal ETF (KOL). Coal stocks have posted a total return of -41.4% as compared with a total return of 10.8% for the S&P 500. All figures are as of June 17, 2020.

Below, we'll examine the top three stocks in the coal industry that are the best value, the most profitable, and the best-performing.

Best Value Coal Stocks

Here are the coal stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio in the sector. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.

Best Value Coal Stocks
  Price ($) Market Cap ($B) 12-Month Trailing P/E Ratio
Warrior Met Coal Inc. (HCC) 16.55 0.8 4.0
Arch Resources Inc. (ARCH) 34.61 0.5 4.5
China Shenhua Energy Co. Ltd. (CSUAY) 6.34 31.5 5.4

Source: YCharts

  • Warrior Met Coal Inc.: Warrior Met Coal is a producer and exporter of metallurgical coal. Its primary customers include blast furnace steel producers in Europe, South America, and Asia. In Q1 2020, Warrior Met reported that net income fell by 80.5% year-over-year (YOY) to $21.5 million.
  • Arch Resources Inc.: Arch Resources, formerly named Arch Coal, is a top producer of thermal and metallurgical coal from surface and underground mines. It has operations across the U.S. The company reported a net loss of $25.3 million in Q1 2020.
  • China Shenhua Energy Co. Ltd.: China Shenhua Energy is the leading publicly listed coal company in China. The company and its subsidiaries are engaged mainly in the production and sale of coal and electricity, as well as railway, port and shipping transportation.

Most Profitable Coal Stocks

These are the coal stocks with the smallest YOY earnings per share (EPS) decline for the most recent quarter. All the other coal stocks we looked at reported losses. A company’s ability to maintain profitability in a difficult business environment can be a sign of good management and/or a strong business model.

Most Profitable Coal Stocks
  Price ($) Market Cap ($B) EPS Growth (%)
China Shenhua Energy Co. Ltd. (CSUAY) 6.34 3.5 -24.7
Warrior Met Coal Inc. (HCC) 16.55 0.8 -80.4

Source: YCharts

  • China Shenhua Energy Co. Ltd.: See company description above.
  • Warrior Met Coal Inc.: See company description above.

Best Performing Coal Stocks

These are the coal stocks in the that had the smallest declines in total return over the past 12 months out of the companies we looked at.

Best Performing Coal Stocks
  Price ($) Market Cap ($B) 12-Month Trailing Price Change (%)
China Shenhua Energy Co Ltd. (CSUAY) 6.34 31.5 -9.4
Warrior Met Coal Inc. (HCC) 16.55 0.8 -37.0
Arch Resources Inc. (ARCH) 34.6 0.5 -60.1
VanEck Vectors Coal ETF (KOL) N/A N/A -41.4
S&P 500 (SPY) N/A N/A 10.8

Source: YCharts

  • China Shenhua Energy Co. Ltd.: See company description above.
  • Warrior Met Coal Inc.: See company description above.
  • Arch Resources Inc.: See company description above.