Natural Resource Partners LP (NRP) is slated to report fourth-quarter 2014 results before the opening bell on Feb 12.

Last quarter, Natural Resource Partners reported earnings on par with the Zacks Consensus Estimate. On an average, the partnership has posted an 11.21% positive earnings surprise in the last four quarters. Let’s see how things are turning out for the fourth quarter.

Factors at Play

Houston, TX-based, Natural Resource Partners is a master limited partnership principally engaged in the business of owning, managing and leasing mineral reserve properties.

Metallurgical coal, which continues to face challenges, forms an important source of Natural Resource’s revenues. Alpha Natural Resources (ANR), a major lessee of the partnership, has idled production at three of Natural Resource Partner’s coal mines. For the fourth quarter of 2014, Alpha Natural had planned to sell coal from its inventory. This would to an extent hurt Natural Resource’s fourth-quarter earnings.

On the positive side, diversifying into oil and gas properties would support Natural Resource Partner’s quarterly revenues. This is because the partnership earns secured royalty payments from leasing out these properties as production on these assets is expected to either remain stable or grow in spite of the plunging oil prices.

In Nov 2014, the partnership acquired non-operated working interests in oil and gas properties, located in the Bakken/Three Forks play from an affiliate of Kaiser-Francis Oil Company.

Coal is slowly losing its popularity due to stringent emission standards expected to come into effect soon. Natural Resource Partners is making efforts to sustain its margins by diversifying away from coal. It will be interesting to see whether the partnership’s initiatives bring fruitful results.

Earnings Whispers?

Our proven model does not conclusively show that Natural Resource Partners will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat consensus estimates. That is not the case here as you will see below.

Zacks ESP:  Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 30 cents per share.

Zacks Rank: Natural Resource’s Zacks Rank #3 when combined with a 0.00% ESP makes an earnings prediction inconclusive.

We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some stocks in the energy sector you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this season:

Bill Barrett Corp. (BBG) has an earnings ESP of +33.33% and a Zacks Rank #3.

Crestwood Equity Partners LP (CEQP) has an earnings ESP of +55.56% and a Zacks Rank #3.