NRP Stock Jumps 19.5% in 3 Months: Should You Stay Invested?

Natural Resource Partners L.P. NRP has delivered an impressive 19.5% rally over the past three months, significantly outperforming the broader industry composite’s 7.8% return. Meanwhile, peers Alliance Resource Partners ARLP and Warrior Met Coal HCC advanced just 2% and 12.7%, respectively.

While this relative strength stands out, investment decisions should be grounded in fundamentals rather than short-term price performance. A deeper examination of NRP’s asset base, financial profile and strategic positioning provides better insight into its long-term prospects.

Large, Diversified Mineral Portfolio

Natural Resource Partners is one of the largest private mineral owners in the United States, holding diversified mineral and subsurface interests across approximately 13 million acres. Its Mineral Rights segment remains the backbone of the business, accounting for 93% of 2024 revenues and other income.

The partnership operates under a capital-light royalty model, leasing its properties to third-party operators in exchange for royalties — typically structured as a percentage of revenues or fixed per-ton payments, often with minimum guarantees. This approach limits direct operating and environmental risks while generating consistent and resilient cash flows.

Coal continues to serve as the primary earnings driver. The company’s key properties include Alpha-CAPP in Virginia, Oak Grove in Alabama, and Williamson and Hillsboro in Illinois. In 2024, production attributable to NRP totaled 27.7 million tons. Metallurgical coal, which is essential for steel production, accounted for roughly 70% of coal royalty revenues in the third quarter of 2025, reinforcing its importance relative to thermal coal.

In addition to royalties, NRP owns coal-related infrastructure assets, such as loadout and processing facilities at Williamson and Sugar Camp, providing stable fee-based income streams that enhance earnings visibility.

Energy Transition Optionality Adds Long-Term Upside

Beyond coal, NRP offers meaningful exposure to energy-transition opportunities. The partnership controls 3.5 million acres of reserved pore space suitable for carbon sequestration. It has already begun monetizing these assets, generating $13.4 million in 2024 from carbon-related activities. NRP is also leasing land for geothermal, wind and solar projects, creating long-term optionality with minimal capital requirements.

Another key asset is NRP’s 49% ownership stake in Sisecam Wyoming, one of the lowest-cost soda ash producers in the Green River Basin. In 2024, Sisecam produced 2.5 million tons of soda ash, with NRP’s share totaling 1.2 million tons. The trona-based production process offers structural cost advantages, supporting competitive positioning even during softer pricing cycles.

Strong Free Cash Flow & Rapid Deleveraging

One of the most notable developments has been NRP’s sustained free cash flow generation despite challenging market conditions. In the third quarter of 2025, the partnership generated $41.8 million in free cash flow, bringing the total to $190 million for the first nine months of 2025.

The ability to produce robust free cash flow amid weaker coal and soda ash pricing underscores the durability of the royalty-based, capital-light business model. Limited capital expenditure and stable royalty streams provide resilience during cyclical downturns.

NRP has also made significant progress in reducing debt. In the third quarter of 2025, the partnership repaid $32 million of debt. Over the past 12 months, nearly $130 million has been retired, leaving approximately $70 million outstanding.

As a result, the consolidated leverage ratio declined to 0.4X, reflecting a highly conservative balance sheet. Additionally, NRP’s debt-to-capitalization ratio of 10.19% is well below the industry average of 16.05%, reducing financial risks and enhancing strategic flexibility.

Attractive Valuation

From a valuation standpoint, NRP appears reasonably priced. The partnership trades at a trailing 12-month EV/EBITDA multiple of 9.53X, below the broader industry average of 10.1X. While the discount may reflect commodity price volatility, it also suggests upside if operating momentum continues and markets stabilize.

Conclusion: Retain the Stock for Now

Natural Resource Partners combines a large and diversified mineral portfolio, a resilient royalty-based business model, strong free cash flow generation and a significantly improved balance sheet. The partnership’s exposure to metallurgical coal, low-cost soda ash production and emerging carbon opportunities further supports long-term earnings durability.

Although commodity price risks remain, NRP’s conservative leverage, discounted valuation and proven ability to generate cash through the cycle justify a constructive stance. Investors should consider retaining the stock for now, as the partnership appears well-positioned to navigate near-term volatility while preserving long-term value creation potential.

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This article originally published on Zacks Investment Research (zacks.com).

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