Stanmore Resources (ASX:SMR) Up 29% in 2026 After Record Q4: Is This Coal Stock a Buy?

Stanmore Resources Rallies After Record December Quarter

Stanmore Resources (ASX: SMR) has been one of the standout performers on the ASX in early 2026, rallying nearly 30% year-to-date to around A$3.00 per share. The catalyst? A record-breaking December quarter that saw full-year saleable production hit 14 million tonnes, right at the midpoint of guidance. For a company that battled severe weather disruptions in the first half of 2025, this turnaround is impressive. But with the stock now trading above some analyst price targets, the question for investors is whether there’s still value on the table.

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Stanmore Resources Delivers Operational Turnaround in Strong Second Half

What makes Stanmore’s result impressive isn’t just the numbers; it’s how the company got there. After weather-hammered operations early in 2025, many investors wrote off the full-year targets. Instead, the team executed a strong recovery that saw production accelerate through the second half.

South Walker Creek led the charge with record output, while Poitrel and Isaac Plains Complex both contributed solid performances. CEO Marcelo Matos noted the company actually exceeded its original run-of-mine plans for the year, finishing with 20.5 million tonnes despite the challenging start.

This consistency across multiple mines suggests the improvement is real and repeatable, not just a lucky quarter. For a commodity producer, operational reliability matters enormously because it determines whether you can take advantage of price upswings when they come.

Strong Balance Sheet Provides a Safety Net

Perhaps more important than production records is how Stanmore Resources managed its finances through a tough pricing environment. Met coal prices have been soft, yet the company slashed net debt from US$90 million in the previous quarter to just US$33 million by year-end while maintaining a robust total liquidity of US$482 million.

This financial discipline gives Stanmore Resources options. The company can weather continued price weakness without stress, invest in growth projects, or return cash to shareholders. Management chose all three, announcing a final dividend of 6.7 US cents per share that beat analyst expectations.

For income-focused investors, the trailing dividend yield of around 4.8% is attractive, particularly when backed by a company generating cash even in difficult markets.

The Investor’s Takeaway

Here’s where it gets interesting. Stanmore Resources trades at roughly 0.9 times sales, well below the met coal peer average of around 3.2 times. That discount suggests the market has been pricing in significant commodity risk, though the recent rally shows sentiment is shifting.

While the rally has seen SMR breeze past Ord Minnett’s A$2.72 target, the broader consensus remains bullish with targets reaching as high as A$3.56. That still implies around 19% upside from the recent price, suggesting some analysts see further room to run.

The risks are real, though. Met coal prices remain under pressure from weak steel demand outside China, and longer-term decarbonisation trends create uncertainty for all coal producers. Stanmore’s Queensland concentration also adds regulatory exposure.

Our view: Stanmore Resources has executed well, and the balance sheet is now in excellent shape with minimal debt. For value and income investors comfortable with commodity cycles, there’s still a case to be made given the valuation discount to peers and healthy dividend yield. However, new buyers at A$3.00 should recognise the stock has already had a strong run. If coal prices recover, there’s upside. If they weaken further, patience will be required.