St. Louis, MS based Peabody Energy Corporation (BTU) is the world’s largest private sector coal mining company, owning majority interests in 28 mines in the U.S. and Australia.
Peabody’s Australian platform provides it with an added competitive advantage as against its solely North America based peers. The company has 10 mine sites in Australia, which are primarily open-cut mines and are less expensive to operate than underground mines. This lowers the overall cost of operations.
In 2014, Peabody has entered into a joint venture with the largest coal producer of Australia, Glencore Coal Pty limited (Glencore), to develop mines in Hunter Valley, Australia. Given the rising regulatory pressure in the U.S. to reduce emissions and increasing competition in the global markets, this joint venture will allow Peabody to produce high quality coal at a cheaper cost.
Peabody’s exposure to both thermal and metallurgical (met) coal definitely helps, however, the company is presently going through a rough phase as increasing usage of natural gas and alternative energy is steadily eating into coal’s share in power generation
Estimate Trend & Surprise History
Investors should note that the estimate for Peabody Energy for the fourth quarter has hardly moved over the last 90 days. The current Zacks Consensus Estimate is a loss of 36 cents remained unchanged over the aforesaid period.
Coming to the earnings surprise, Peabody Energy has surpassed the Zacks Consensus Estimate in two of the last four quarters, however, due to wider negative surprise in first quarter of 2014, resulting in a negative average surprise of 422.35%.
Zacks Rank: Currently, Peabody Energy has a Zacks Rank#4 (Sell) but that could change following its fourth quarter 2014 earnings report which has just released. We have highlighted some of the key details from the just-released announcement below:
Earnings: Peabody Energy’s loss is much wider than expected. Adjusted Loss per share came in at $1.21, wider than the Zacks Consensus Estimate of 36 cents. Peabody broke even in fourth-quarter 2013.
Revenue: Revenues of $1,684.5 million surpassed the Zacks Consensus Estimate of $1,633 million but decreased 3.4% year over year.
Key Stats: Peabody Energy reported lower sales volumes for the reported quarter owing to softness in Midwestern U.S. Mining operations and Trading and Brokerage operations. It also witnessed decline in revenue during the quarter affected by lower realized price of coal sold in Australia.
Stock Price: Peabody Energy shares lost nearly 6.3% during pre-market trading. It would be interesting to see how the market reacts to the softer results during the trading session today.
Check back later for our full write up on this BTU earnings report later!
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