Core Natural Resources: A Tactical Buy Ahead of Q3 Earnings Amid Operational Setbacks

Core Natural Resources (NYSE: CNR) has emerged as a compelling short-term trading opportunity as it approaches its Q3 2025 earnings release on November 5. Despite operational headwinds at its critical Leer South mine, the company's revised operational forecasts, institutional sentiment, and technical indicators suggest a potential upside ahead of the report. Here's why traders should consider a tactical buy before the earnings event.

Operational Challenges and Revised Forecasts: A Mixed Picture

CNR's Leer South mine, a key producer of metallurgical coal, has faced repeated setbacks in 2025 due to combustion-related incidents. The mine was temporarily sealed twice this year—first in January and again in June—forcing Core to delay its planned restart of longwall operations until late 2025. While this has disrupted production timelines, the company has maintained its full-year sales guidance for metallurgical coal (7.5–8.0 million tons), citing progress in resolving technical issues and anticipating a Q4 rebound.

Crucially, Core's cost metrics remain intact. Metallurgical coal cash costs are projected to drop to the low $90s per ton in H2 2025 once Leer South resumes full operations. Additionally, the company expects over $100 million in insurance recoveries from the mine incidents, which could offset operational losses and boost liquidity. While production delays pose near-term risks, the maintained sales guidance and cost trajectory suggest management's confidence in delivering on fundamentals ahead of Q3 earnings.

Institutional Sentiment: Low Coverage, High Potential Catalysts

CNR's stock has historically been underfollowed by analysts, with only three analysts covering the company as of June 2025. This lack of coverage could amplify volatility around earnings, creating a “buy the rumor, sell the news” dynamic—or, conversely, a window for positive surprises to go underappreciated.

The June 2025 update on Leer South's progress, including the reactivation of ventilation systems and equipment assessment, caused a 3% stock surge as investors digested the news. While operational risks remain, the market appears to be pricing in the worst-case scenario. The $1.1 billion liquidity post-merger with Arch Resources and the $1 billion share repurchase program further underscore CNR's financial resilience, which could act as a stabilizing force ahead of earnings.

Technical Analysis: A Golden Cross and Support Levels

Technical indicators suggest CNR is approaching a buying opportunity. The stock's 50-day moving average has crossed above its 200-day moving average, forming a bullish “golden cross.” Meanwhile, volume patterns indicate increasing investor interest, particularly after the June Leer South update.

Key support levels are at $18.50–$19.00, where the stock rebounded in April 2025 after a 17% decline. A breach of this zone could signal further weakness, but a sustained close above $22.00—the June highs—would validate bullish momentum. Traders might consider a limit order at $19.50–$20.00, with a stop-loss below $18.50 to manage risk.

Why Buy Now?

1. Earnings Catalyst: The Q3 report (Nov 5) will likely highlight synergy capture progress from the Arch merger (one-third of $110–$140 million achieved) and Leer South's delayed restart. Even if Q3 production metrics lag, the maintained sales guidance and insurance recoveries could surprise analysts.
2. Valuation: CNR trades at a 12.8x forward P/E, below its 5-year average, despite its dominant position in metallurgical coal—a segment with long-term demand tailwinds from Asian steel production.
3. Technical Setup: The golden cross and support levels create a favorable risk-reward profile for short-term traders.

Risks to Consider

• Leer South Delays: If the mine's Q4 restart slips further, it could pressure Q4 results and investor confidence.
• Coal Pricing: Weak thermal coal prices (near three-year lows) could weigh on margins, though CNR's hedged positions (24 million tons priced at $61–$63/ton) offer some protection.
• Debt Management: While CNR's refinancing efforts have improved liquidity, leverage remains a concern.

Conclusion: A Tactical Play with a Clear Exit

Core Natural Resources presents a high-risk, high-reward short-term opportunity ahead of its Q3 earnings. The golden cross, maintained guidance, and insurance recoveries suggest a potential rebound, while the low analyst coverage leaves room for upside surprises. Traders should target entry points between $19.50–$20.00, with a stop-loss below $18.50 and an exit strategy tied to earnings reaction.

As the saying goes: “Buy the rumor, sell the news”—but in this case, the “rumor” (operational progress) might just become reality.

Disclosure: This analysis is for informational purposes only and not financial advice. Always conduct your own research or consult a financial advisor.