Many investors have been hoping that a bottom has been found in either stock. That has unfortunately not worked out so far. Still, is it possible that the expectations are too pessimistic? Then what about the flip side — what if things are set to get even worse?
Peabody could easily set the tone for many other coal mining outfits and coal-related companies, and the industry remains under fire. AK Steel has tried to turn itself around in steel, but so far that has yet to truly take root when you look at its stock performance. Both companies also come with a very high short interest as well.
Peabody will report earnings before the markets open Tuesday. Thomson Reuters has consensus estimates of -$0.35 in earnings per share and $1.65 billion in revenue. The same period in the previous year had $0.00 in earnings per share and $1.74 billion in revenue.
Earlier this month, Barclays initiated coverage of Peabody with an Equal Weight rating but lowered its price target to $6.71 from $10.00. Deutsche Bank made a similar call reiterating a Hold rating, while moving down the price target to $10.00 from $16.00.
Peabody saw its short interest take a big jump to 50.8 million with 4.1 days to cover for the December 31 settlement date. The previous reading was 43.3 million with 2.7 days to cover. Over the past 52-weeks, the most current short interest reading is the second highest.
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Shares of Peabody were up over 5% at $6.65 in the last hour of trading Monday. The stock supposedly has a consensus analyst price target of $13.46 and a 52-week trading range of $6.07 to $19.63. Within the past five years, Peabody’s stock was as high as roughly $70.
AK Steel is set to report its fourth-quarter earnings before the markets open Tuesday morning. The consensus estimates are $0.07 in earnings per share and $1.99 billion in revenue. The fourth quarter of the previous year had $0.26 in earnings per share on $1.46 billion in revenue.
Some analysts made calls this month as AK Steel’s earnings approached. Deutsche Bank had a Buy rating and set its price target at $10.00. Goldman Sachs lowered its price target for AK Steel to $6.50 from $13.00.
AK Steel recently saw its short interest rise to 46.3 million with five days to cover for the December 31 settlement date. The previous reading was 45.2 million with 4.4 days to cover. The current reading was the second highest short interest reading for the past 52 weeks.
Shares of AK Steel were up over 0.5% at $4.04. The stock has a consensus analyst price target of $7.22 and a 52-week trading range of $3.83 to $11.37. In the past five years, shares of AK Steel had even been as high as the $25 mark.
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When you have actively traded and low-priced stocks with many investors hoping for news, this often sets the stage for a big battleground. Expectations are just not that much if you look at the recent stock performance. Imagine if there is any good news to speak of. Sometimes it doesn’t even take that great of news to send short sellers running for cover.
Stay tuned.
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