Warrior Met Coal Beats Q1 Estimates, But Blue Creek Execution Remains Key

What happened

Warrior Met Coal reported Q1 EPS of $1.37, beating the $1.21 consensus and swinging from a loss last year. This marks the first quarter of positive earnings after a period of weak pricing, driven by higher Blue Creek volumes. However, the beat does not fundamentally alter the investment thesis, which hinges on converting record production into shipments and drawing down inventories from ~1.6M st. The stock already trades at 18.6x EV/EBITDA, embedding a successful ramp, and management still expects negative FCF in 1H26. The real test comes in Q2 when inventory and FY26 guidance must hold.

Implication

The Q1 beat confirms Blue Creek is ramping, but the thesis remains a WAIT until Q2 evidence shows inventories falling and cash flow turning positive in 2H26. Attractive entry remains $70, with trim at $95.

Thesis delta

The Q1 beat slightly de-risks the volume ramp, but the core thesis—waiting for inventory draw and pricing confirmation—remains unchanged. No shift in rating.