Value
8.5/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 8.4 |
| P/S | 9.3 |
| EV/EBITDA | 8.5 |
| Fwd P/E | 9.5 |
| PEG | 9.7 |
| Analyst target | 6.0 |
- ▸Forward P/E: 8.5x
- ▸PEG: 0.55
- ▸Attractively valued
ARLP · Why this verdict
Why Alliance Resource Partners (ARLP) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.0/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
The partnership offers an inexpensive forward multiple of 8.6 times and three consecutive recent earnings beats averaging 16% above consensus, but revenue is declining 4% year over year, momentum has failed its minimum threshold, volume is in distribution, and nearly 90% of sales are tied to domestic electric utilities — making this a yield-income story whose upside is capped at 7.1% even in the bull case.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The partnership trades at a forward multiple of 8.6 times with a growth-adjusted ratio well below 1.0, placing it among the most attractively valued names in its peer group on a near-term earnings basis. Valuation breakdown | The unit price converges toward the analyst consensus target near $26 within 12 months as earnings remain stable, reducing the current discount. | Tripped→Stable |
| CounterInexpensive multiples can persist indefinitely in businesses with secularly declining revenue; the 4% revenue contraction suggests the low multiple reflects genuine deterioration rather than a quality business temporarily out of favor. | ||
The partnership delivered three consecutive quarterly beats following a miss in the oldest observed period, with an average upside surprise across all four periods of more than 16%, indicating management has re-established a pattern of conservative guidance. Earnings | EPS beats consensus in each of the next two reported quarters, extending the streak and supporting unit price stability. | →Stable |
| CounterDeclining revenues make it harder to sustain beats if pricing weakens further; light analyst coverage dampens the market-moving power of any positive surprise, and the prior miss shows the earnings trajectory is not guaranteed. | ||
Nearly 90% of revenue is derived from domestic electric utilities, leaving the partnership highly exposed to any structural shift in utility demand, regulatory change in the power sector, or a single large-customer contract renegotiation. Bear case | Revenue concentration in domestic electric utilities stays at or above 85% over the next 12 months, maintaining the exposure without diversification. | ↑Improving |
| CounterConcentration in a single stable end-market may provide more predictable revenue than a diversified industrial base would offer; if that segment remains a consistent buyer, the concentrated revenue is also highly visible. | ||
Revenue declined 4% year over year, the momentum score sits below the minimum passing threshold at 3.6 versus the 4.5 required, and volume is in distribution with a falling on-balance volume — three converging signals indicating the business is contracting and the market is positioned accordingly. Growth breakdown | Revenue growth turns positive above 3% YoY for 2 consecutive quarters, signaling the decline has reversed. | →Stable |
| CounterThe stock holds above its 200-day moving average and an elevated put/call ratio of 1.71 reflects hedging activity that could unwind sharply if earnings hold, potentially turning distribution into accumulation quickly. | ||
The partnership trades at a forward multiple of 8.6 times with a growth-adjusted ratio well below 1.0, placing it among the most attractively valued names in its peer group on a near-term earnings basis.
Tripped→StableValuation breakdown
- Expectation
- The unit price converges toward the analyst consensus target near $26 within 12 months as earnings remain stable, reducing the current discount.
CounterInexpensive multiples can persist indefinitely in businesses with secularly declining revenue; the 4% revenue contraction suggests the low multiple reflects genuine deterioration rather than a quality business temporarily out of favor.
The partnership delivered three consecutive quarterly beats following a miss in the oldest observed period, with an average upside surprise across all four periods of more than 16%, indicating management has re-established a pattern of conservative guidance.
→StableEarnings
- Expectation
- EPS beats consensus in each of the next two reported quarters, extending the streak and supporting unit price stability.
CounterDeclining revenues make it harder to sustain beats if pricing weakens further; light analyst coverage dampens the market-moving power of any positive surprise, and the prior miss shows the earnings trajectory is not guaranteed.
Nearly 90% of revenue is derived from domestic electric utilities, leaving the partnership highly exposed to any structural shift in utility demand, regulatory change in the power sector, or a single large-customer contract renegotiation.
↑ImprovingBear case
- Expectation
- Revenue concentration in domestic electric utilities stays at or above 85% over the next 12 months, maintaining the exposure without diversification.
CounterConcentration in a single stable end-market may provide more predictable revenue than a diversified industrial base would offer; if that segment remains a consistent buyer, the concentrated revenue is also highly visible.
Revenue declined 4% year over year, the momentum score sits below the minimum passing threshold at 3.6 versus the 4.5 required, and volume is in distribution with a falling on-balance volume — three converging signals indicating the business is contracting and the market is positioned accordingly.
→StableGrowth breakdown
- Expectation
- Revenue growth turns positive above 3% YoY for 2 consecutive quarters, signaling the decline has reversed.
CounterThe stock holds above its 200-day moving average and an elevated put/call ratio of 1.71 reflects hedging activity that could unwind sharply if earnings hold, potentially turning distribution into accumulation quickly.
Per-dimension breakdown
Quality
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 4.7 |
| ROA | 5.1 |
| Gross margin | 2.9 |
| Op margin | 5.0 |
| Net margin | 5.7 |
| Current ratio | 5.4 |
| FCF quality | 6.8 |
| Moat | 5.1 |
| Piotroski F | 6.7 |
- ▸No competitive moat
Growth
0.7/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 1.4 |
| EPS growth | 0.0 |
- ▸Declining revenue: -4%
Momentum
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 7.4 |
| OBV | 1.0 |
| MA position | 7.0 |
| Volume | 1.3 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 6.8 |
| Price target | 8.4 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (3.0) — signal dampened
- ▸Analyst upside: 27%
Insider
5.0/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.0 |
| notable moves | 5.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
2.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.3 |
| quality rank | 5.0 |
| growth rank | 2.5 |
Technical
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.7 |
| support resistance | 4.4 |
| 52w position | 6.9 |
Risk (lower is worse)
8.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.1 |
| days to cover | 5.2 |
| volatility | 8.4 |
| beta | 10.0 |
| debt equity | 8.9 |
- ▸Concentration risks: 1 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 4.0 |
- ▸Strong earnings: 3B/1M
- ▸Earnings in 6 days
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- ASYMMETRY:1.6>=1.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:4.4<4.5
- EARNINGS_PROXIMITY:6d<=7d
Warning (0)
none
Reward-to-Risk
1.65
Upside
+8.3%
Downside
5.0%
Sizing output
AVOID
SetupRange Bound — RSI 58 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $3.1B<$5B
Investment implication
The F-path SELL output reflects an overall score of 5.0 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Value at 8.5) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:4.4<4.5, EARNINGS_PROXIMITY:6d<=7d) reinforce the read. Current asymmetry R:R is 1.65 — supplementary context, not the trigger for this path.
The strongest dimensions are Value at 8.5, Risk (lower is worse) at 8.3, and Sentiment at 6.8; the weakest are Growth at 0.7, Peer rank at 2.2, and Momentum at 4.4. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of 1.65 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Deep Value Low MultipleTripped
Trip ifForward P/E expands above 12x, eliminating the deep-value case.
- P2Recent Earnings Beat Streak
Trip ifEPS surprise falls below 0% for 2 consecutive reported quarters.
- P3Customer Concentration Structural Headwind
Trip ifRevenue from domestic electric utilities falls below 75% of total revenue, indicating meaningful diversification.
- P4Revenue Decline Momentum Failure
Trip ifRevenue growth turns positive and stays above 5% YoY for 2 consecutive quarters.