Peabody Sinks on Results, Forecast

Peabody Energy Corp. (NYSE: BTU) this morning reported its quarterly results of $0.73 adjusted earnings per share (EPS) and $2 billion in revenue. EPS dropped from $1.11 in the same period a year ago, while revenue was essentially flat. The results compare to the Thomson Reuters consensus estimates of $0.53 and $2.06 billion in revenue. Adjusted EPS results include a $0.22 gain from a tax benefit, which helped pump up the number.

The coal miner lowered guidance for third-quarter EPS to a range of $0.20 to $0.45, versus the Thomson Reuters consensus for EPS of $0.65. The company also lowered its sales estimate from 235 million to 255 million tons to a range of 230 million to 250 million tons.

The company’s CEO noted:

While we see some bright spots within the global coal markets, there remain macroeconomic and industry challenges that Peabody is well positioned to weather given our global position and financial strength.

Analysts are not expecting much from the coal sector this quarter. The bankruptcy filing by Patriot Coal Corp. and the struggles of James River Coal Co. (NASDAQ: JRCC), Arch Coal Inc. (NYSE: ACI) and Alpha Natural Resources Inc. (NYSE: ANR) are well-known as well. The EPS estimate for James River has fallen by more than 15% since the end of the first quarter, while the estimate for Arch Coal is down from $0.13 to -$0.17, and Alpha’s estimate has dropped from -$0.16 to -$0.32.

Peabody’s shares are trading down about 7.2% at $21.50, and the 52-week trading range is $20.67 to $60.69. Thomson Reuters had a consensus analyst price target of $39.50 before this news. The report also is taking down shares of other coal miners, with Alpha down 2.8% and the others off by about 1%.

Paul Ausick