ALLIANCE RESOURCE PARTNERS LP (ARLP): what the price requires
The current priced-in claim for ALLIANCE RESOURCE PARTNERS LP (ARLP) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.
Generated: 2026-07-19 · Source: https://boothcheck.com/report/ARLP
Headline
| Field | Value |
|---|---|
| Ticker | ARLP |
| Company | ALLIANCE RESOURCE PARTNERS LP |
| Current price | $24.67/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 6.4% |
| Operating margin today | 14.2% |
| Margin compression implied | -7.8pp |
| Multiple paid | 11x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.
Solve inputs: computed at a 8.4% cost of capital with 4% terminal growth over a 5-year stage.
How unusual the bet is: within-range (limited comparison data)
| Reference | Value |
|---|---|
| vs own history | -0.31σ |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | — | 0 | — |
| Earnings | 0.90x | 2 | justifies |
| Relative | 0.98x | 3 | justifies |
| Growth | 1.08x | 3 | expensive |
Families that justify the price: Earnings, Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.2%); the inversion above states its own rate.
Per-Model Detail (n=8)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $22.88 | 1.08x | yes | FCF base $0.3B, growth -7% (input: historical growth), terminal g 0.5%, WACC 8.2%, 5yr projection |
| DCF Exit Multiple | Growth | $27.46 | 0.90x | yes | Exit EV/EBITDA: 4.0x / 5.8x / 10.8x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $25.30 | 0.98x | yes | P/S fallback (negative EPS): Sector P/S 1.5x × TTM revenue — excluded from consensus |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | — | — | no | — |
| Two-Stage Excess Return | Asset | — | — | no | — |
| Discounted Future Market Cap | Growth | $12.23 | 2.02x | yes | Rev $2.2B, growth -7% (input: historical growth; tapered), Terminal P/S: 1.1x / 1.5x / 1.8x (bear / base = today's held flat / bull, cap 6x) |
| Peter Lynch Fair Value | Relative | $0.00 | — | no | Negative/zero EPS — earnings-based value floored at $0 |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $30.90 | 0.80x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.46B × (1−20%) / WACC 8.2% → EPV (no growth) |
| Residual Income | Asset | — | — | no | — |
| Graham Number | Asset | — | — | no | — |
| EV/EBITDA Relative | Relative | $35.64 | 0.69x | yes | EBITDA $0.63B × sector EV/EBITDA 8.0x |
| FCF Yield | Earnings | $24.74 | 1.00x | yes | FCF $338.8M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | — | — | no | — |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | $25.30 | 0.98x | yes | Revenue $2.17B × sector P/S 1.5x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | — | — | no | — |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $467.1m |
| Net debt / NOPAT (after-tax) | 1.88x |
| Net debt / operating income (pre-tax) | 1.51x |
| Interest coverage | 7.7x |
| Burning cash | no |
Bullet Takeaways
- Alliance Resource Partners is a coal producer that has quietly built a second business in mineral royalties: its oil and gas royalty segment set a record at $41.3 million in Q1 2026, and the partnership holds reportable segments in coal mining, coal royalties, and oil and gas royalties.
- The price asks almost nothing: at about 11 times operating income the units sit below what even a 5%-a-year decline in operating profit would justify, so the market is already pricing the coal business as a wasting asset.
- Watch the distribution against the earnings: the partnership pays $2.40 a unit annualized while Q1 net income fell to $0.07 a unit after a $37.8 million impairment, so the gap between the cash payout and the reported profit is the central tension.
Bull Case
The counterintuitive fact about a coal partnership trading at a coal multiple is how much of its value is no longer coal. Alliance reports three distinct businesses: coal mining, coal royalties, and oil and gas royalties. The royalty segments are the surprise. Oil and gas royalties set a record at $41.3 million in Q1 2026, and the partnership raised its 2026 oil and gas royalty volume guidance by about 5%. Royalty income carries almost no operating cost, so a dollar of royalty revenue is far more valuable than a dollar of mining revenue. The market is valuing the whole thing as a declining coal miner while a growing, capital-light royalty stream sits inside it.
The coal business itself is more durable in the near term than the secular story suggests, because the partnership has already sold most of it. Over 95% of expected 2026 coal sales volumes are committed and priced. The partnership "markets our coal through established customer relationships and competitive bidding processes", and contracted tonnage at locked prices removes most of the volatility the market fears for at least the current year. Revenue and cash flow for 2026 are largely visible, not a guess.
The valuation is where the bull rests its case. At about $23.50 (June 27, 2026) the units trade near 11 times operating income and below several of the methods anchored on what the business actually earns: the normalized earnings-power approach lands near $31, the sector EV-to-EBITDA comparison near $36, and capitalized free cash flow near $25. Free cash flow of roughly $339 million comfortably funds the $2.40-per-unit distribution, a high single-digit to low double-digit cash yield on the unit price. When a price sits below where the earnings-based methods land, the holder is paid a large cash return while owning a business the market has already written down to terminal decline. If the royalty segments keep growing and the coal cash flows persist longer than the market expects, the units are cheap for a reason that fixes itself.
Bear Case
The structural truth a unitholder has to face is that the core business is coal, and coal is in secular decline. Revenue fell about 7% on a trailing basis and dropped 4.5% in Q1 2026 to $516 million as weaker pricing offset slightly higher tonnage. That is not a cyclical dip waiting to reverse; it is the long arc of a fuel being designed out of the power grid. A high distribution paid out of a shrinking asset base is a return of capital dressed as income, and the math only works for as long as the reserves and the contracts last.
The most recent quarter showed how quickly the reported economics can deteriorate. Net income attributable fell to $9.1 million, or $0.07 a unit, down from $74 million, or $0.57 a unit, a year earlier, dragged by lower coal sales, higher depreciation, a decline in the value of digital assets, and a $37.8 million non-cash impairment at the Mettiki complex. An impairment is the accountant's admission that a mine is worth less than the books said. Meanwhile the partnership pays $0.60 a unit per quarter, far above the $0.07 it earned in the period. The distribution is currently covered by cash flow rather than reported earnings, but the gap is a warning: a soft coal price, another impairment, or a weak royalty quarter narrows the cushion fast.
The bitcoin holding is its own small governance question. The partnership held 618 bitcoins valued at $42.2 million at quarter-end, and the change in their value swung the reported result. A coal-and-royalty partnership holding crypto on its balance sheet introduces a volatile, unrelated asset that has nothing to do with the underlying business and adds noise to the earnings the distribution is measured against. Add it up: a declining commodity core, a fresh write-down, a payout that exceeds reported profit, and a speculative asset on the balance sheet. The low multiple is not a mistake the market will correct; it is the market's honest price for a wasting asset that pays you while it shrinks.
Valuation
The price is making an unusually pessimistic bet, and naming it is the key to the section. At about $23.50 a unit, Alliance trades near 11 times company-wide operating income, a multiple so low that the price sits below what even a 5%-a-year decline in operating profit would warrant. That is a bound, not a target: the market is not asking the business to grow, it is pricing in continued shrinkage and still finding the units cheap against their cash generation. For a coal producer, that stance is defensible rather than irrational, because the fuel is in long-run decline.
The methods cluster around or above the price, which is the value-supported pattern. The earnings-power family, capitalizing normalized operating income, lands near $31. The relative-multiple family, using sector EV-to-EBITDA and price-to-sales, lands near $25 to $36. Capitalized free cash flow lands near $25, just above the price. Only the future-market-cap model, which extrapolates the recent revenue decline forward, lands below. Read together, the methods that anchor on what the business earns today say the units are worth at least their current price and likely more, while the one method that projects the decline indefinitely says less. The disagreement is the bet: pay the low multiple and you are betting the coal cash flows and growing royalties persist longer than a straight-line decline assumes.
The balance sheet is sound enough to carry the bet. Net debt is about $467 million, interest is covered roughly seven times by operating profit, and total liquidity stood at $431 million at quarter-end. Free cash flow of roughly $339 million funds the $2.40-per-unit distribution. The decisive question the valuation poses is not solvency but duration: the units are priced for a fading coal business, so the return depends on how long the cash flows last and how fast the royalty segments grow into the gap the coal decline leaves behind.
Catalysts
The first quarter of 2026 was a tale of two segments. Total revenue was $516 million, down 4.5% as weaker coal pricing offset slightly higher tonnage, while oil and gas royalties hit a record $41.3 million. Adjusted EBITDA was $155 million. Net income attributable fell sharply to $9.1 million, or $0.07 a unit, from $74 million a year earlier, weighed down by a $37.8 million non-cash impairment at the Mettiki complex and a decline in the value of the partnership's digital assets. The board approved a quarterly cash distribution of $0.60 a unit, an annualized $2.40.
The forward catalysts split along the same two lines. On coal, more than 95% of 2026 expected sales volumes are committed and priced, which locks in most of the year's revenue and removes near-term pricing risk. On royalties, the partnership raised its 2026 oil and gas royalty volume guidance by about 5%, the segment the bull case leans on for growth. The metrics to watch over the next several quarters are whether the royalty segments keep setting records, whether coal pricing stabilizes against the maintained volume guidance, and whether further impairments follow the Mettiki write-down. Each is a direct test of whether the low multiple is a value opportunity or an accurate read on a fading core.
Peer Cohorts (Per Segment, With Filing Citations)
Core business (reported)
- BTU (PEABODY ENERGY CORP)
- FY2025 10-K: …mineral resources from lower to higher levels of geological confidence should not be assumed. Actual coal tonnage recovered, as well as related revenue and expenditures, from identified reserve and resource areas or properties may vary materially from estimates. Thus, these estimates may not accurately reflect its…
- FY2025 10-K: …of coal prices and demand, it is reasonably possible that coal prices may decrease and/or fail to improve in the near term, which, absent sufficient mitigation such as an offsetting reduction in the Company's operating costs, may result in the need for future adjustments to the carrying value of its long-lived mining…
- HCC (Warrior Met Coal, Inc.)
- FY2025 10-K: …among the highest quality steelmaking coals in the world and is preferred as a base steelmaking coal in our customers' blends. Our marketing strategy is to focus on international markets mostly in Europe and 11 South America where we have a shipping time and distance advantage. In recent years, due to a combination…
- FY2025 10-K: …operating and compliance costs and could have a material adverse effect on our operations and/or, along with analogous foreign laws and regulations, our customers' ability to use our products. Due in part to the extensive and comprehensive regulatory requirements, along with changing interpretations of these…
- CNR (Core Natural Resources, Inc.)
- FY2025 10-K: …competitors or market preferences. In particular, as we continue to evaluate a potential new line of business involving REEs, our strategy may include expanding into the exploration, development, extraction, processing, separation, or commercialization of REEs and related downstream activities. These initiatives are…
- FY2025 10-K: …conditions of any of the industries we serve or that are served by our customers could adversely affect our business, financial condition, results of operations, cash flows and liquidity in a number of ways. For example: • demand for electricity in the U.S. is impacted by industrial production, which, if weakened,…
- NRP (NATURAL RESOURCE PARTNERS LP)
- FY2025 10-K: …departments that do not earn revenues. Costs incurred by these departments include interest and financing, corporate headquarters and overhead, centralized treasury, legal and accounting and other corporate-level activity not specifically allocated to a segment. Our financial results by segment for the year ended…
- FY2025 10-K: …Suite 3325, Houston, Texas 77002 and our telephone number is (713) 751-7507. 1 Table of Contents Segment and Geographic Information The amount of 2025 revenues and other income from our two operating segments is shown below. For additional business segment information, please see " Item 7. Management's Discussion and…
- CCJ (Cameco Corp)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Q1 2026 results, April 27 2026 · FY2025 10-K