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1. Company Snapshot

1.a. Company Description

Peabody Energy Corporation engages in coal mining business in the United States, Japan, Taiwan, Australia, India, Indonesia, China, Vietnam, South Korea, and internationally.The company operates through Seaborne Thermal Mining, Seaborne Metallurgical Mining, Powder River Basin Mining, and Other U.S. Thermal Mining segments.It is involved in mining, preparation, and sale of thermal coal primarily to electric utilities; mining bituminous and sub-bituminous coal deposits; and mining metallurgical coal, such as hard coking coal, semi-hard coking coal, semi-soft coking coal, and pulverized coal injection coal.


The company supplies coal primarily to electricity generators, industrial facilities, and steel manufacturers.As of December 31, 2021, it owned interests in 17 coal mining operations located in the United States and Australia; and had approximately 2.5 billion tons of proven and probable coal reserves and approximately 450,000 acres of surface property through ownership and lease agreements.The company also engages in direct and brokered trading of coal and freight-related contracts, as well as provides transportation-related services.


Peabody Energy Corporation was founded in 1883 and is headquartered in St. Louis, Missouri.

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1.b. Last Insights on BTU

Peabody Energy Corporation's recent performance was positively driven by improved earnings power, strategic positioning, and a favorable US market and policy environment. The company's Q3 2025 adjusted EBITDA rose due to higher PRB and seaborne thermal volumes, and lower metallurgical costs. The termination of the purchase agreement for Anglo-American's Australian coal mines removed a major financial burden. Additionally, the company's Centurion Mine longwall is on track to achieve an accelerated start in February 2026. A quarterly dividend of $0.075 per share was declared.

1.c. Company Highlights

2. Peabody's Q3 Earnings: A Strong Performance Amidst Industry Headwinds

Peabody's financial performance in Q3 was marked by a GAAP net loss attributable to common stockholders of $70.1 million, with an adjusted EBITDA of almost $100 million and operating cash flow of $122 million. The actual EPS came out at '-0.58', relative to estimates at '-0.19', indicating a larger-than-expected loss. Despite this, the company's adjusted EBITDA increased from Q2, driven by higher Powder River Basin shipments, better-than-expected seaborne thermal coal volume, and low metallurgical coal costs. The company's cash position stood at $603 million, with total liquidity exceeding $950 million.

Publication Date: Nov -03

📋 Highlights
  • Centurion Mine Expansion:: Production to surge sevenfold to 3.5 million tons by 2026 with longwall operations starting next quarter.
  • Strong Liquidity:: $603 million cash position and $950 million total liquidity, alongside $122 million operating cash flow.
  • Metallurgical Coal Margin Improvement:: $28 million adjusted EBITDA with $2.50/ton cost reduction target and 17% margin in seaborne met coal.
  • PRB Performance:: 20% QoQ adjusted EBITDA growth ($52 million) and 3 million-ton volume increase expected for full-year.
  • Arbitration Update:: $29 million deposit recovery expected from Anglo, with $54 million incurred costs and $5 million annual legal fees ahead.

Segment-wise Performance

The company's segment-wise performance was largely positive, with Seaborne Thermal recording $41 million of adjusted EBITDA and 17% margins, while Seaborne Metallurgical reported adjusted EBITDA of $28 million. U.S. thermal mines generated $59 million of adjusted EBITDA, with the Powder River Basin delivering $52 million of adjusted EBITDA, a 20% increase from the prior quarter. The company's flagship Centurion mine is expected to start longwall production next quarter, with shipments expected to expand sevenfold in 2026 to 3.5 million tons.

Guidance and Outlook

Peabody updated its full-year guidance, with seaborne thermal volumes anticipated to be 350,000 tons higher, and seaborne met cost targets improved by $2.50 per ton. PRB volumes are anticipated to be 3 million tons higher, while costs are being lowered. The company expects another consistent quarter to end the year and remains confident in its ability to bring Centurion online early next year and deliver stronger cash flow. Analysts estimate next year's revenue growth at 20.4%, indicating a positive outlook for the company.

Valuation Metrics

With a P/E Ratio of 24.04 and an EV/EBITDA of 4.43, the company's valuation appears to be reasonable, considering its growth prospects. The P/S Ratio stands at 0.83, indicating that the company's revenue growth is not fully priced in. Additionally, the company's Free Cash Flow Yield is 5.83%, which is a positive indicator for investors. As Peabody focuses on growing its seaborne metallurgical coal business and exploring opportunities in rare earth elements, its valuation metrics will be crucial in determining its attractiveness to investors.

Rare Earth Elements and M&A

Peabody has initiated a new sampling and laboratory analysis program, indicating similar or better concentrations of rare earth elements than others reported in the PRB. The company is assessing its potential to produce critical minerals and rare earth elements sustainably. Regarding M&A, Peabody's focus is on growing its seaborne metallurgical coal business, with the Centurion mine coming online. The company expects a return of a $29 million deposit in the arbitration process with Anglo and has incurred $54 million in costs.

3. NewsRoom

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Peabody Energy Stock: Why One Fund Trimmed 3 Million Shares After a Big Run

Dec -04

Source: fool.com

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Creative Planning Has $1.43 Million Stock Holdings in Peabody Energy Corporation $BTU

Nov -29

Source: defenseworld.net

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Commonwealth of Pennsylvania Public School Empls Retrmt SYS Raises Stock Position in Peabody Energy Corporation $BTU

Nov -27

Source: defenseworld.net

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BTU Announces Closing of Over Subscribed Flow Through Financing

Nov -24

Source: accessnewswire.com

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Peabody Elects Georganne Hodges and Clayton Walker to Board of Directors

Nov -20

Source: prnewswire.com

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Bank of New York Mellon Corp Decreases Stock Holdings in Peabody Energy Corporation $BTU

Nov -17

Source: defenseworld.net

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BTU Announces Flow Through Financing

Nov -11

Source: accessnewswire.com

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Peabody Energy Corporation $BTU Stock Holdings Trimmed by AlphaQuest LLC

Nov -06

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.09%)

6. Segments

Seaborne Thermal

Expected Growth: 4.65%

Seaborne Thermal from Peabody Energy Corporation's 4.65% growth is driven by increasing demand from Asian markets, particularly China and India, for high-quality thermal coal. Additionally, supply constraints in key exporting countries, such as Indonesia and Australia, have tightened the market, supporting prices and driving growth.

Seaborne Metallurgical

Expected Growth: 4.85%

Seaborne Metallurgical from Peabody Energy Corporation's 4.85% growth is driven by increasing global steel demand, particularly from infrastructure development in Asia, and supply constraints in the metallurgical coal market. Additionally, Peabody's cost-cutting initiatives and operational efficiencies have improved profitability, contributing to the segment's growth.

Powder River Basin

Expected Growth: 3.63%

The 3.63% growth in Powder River Basin from Peabody Energy Corporation is driven by increasing demand for thermal coal, favorable weather conditions, and operational efficiencies. Additionally, the region's low-cost production and proximity to Asian markets support exports, contributing to the segment's growth.

Other United States Thermal Mining

Expected Growth: 2.83%

The 2.83% growth in Other United States Thermal Mining from Peabody Energy Corporation is driven by increasing demand for thermal coal from utilities, favorable weather patterns, and operational efficiencies. Additionally, Peabody's cost management initiatives and strategic capital allocation have contributed to the segment's growth.

Corporate and Other

Expected Growth: 3.85%

Peabody Energy's Corporate and Other segment growth of 3.85% is driven by increased metallurgical coal demand, strategic cost reductions, and improved operating efficiencies. Additionally, the company's diversified revenue streams, including its trading and brokerage business, contribute to the segment's growth.

7. Detailed Products

Thermal Coal

Peabody Energy Corporation is one of the largest producers of thermal coal, which is used to generate electricity.

Metallurgical Coal

Peabody Energy Corporation produces high-quality metallurgical coal, used in the production of steel.

Mining Services

Peabody Energy Corporation offers mining services, including mine planning, operations, and maintenance.

Coal Trading

Peabody Energy Corporation engages in coal trading, sourcing, and logistics.

Land Management

Peabody Energy Corporation manages large land holdings, offering opportunities for oil and gas exploration, and recreational activities.

8. Peabody Energy Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Peabody Energy Corporation faces moderate threat from substitutes, as renewable energy sources like solar and wind power are becoming increasingly competitive with coal.

Bargaining Power Of Customers

Peabody Energy Corporation's customers, primarily utilities and industrial companies, have limited bargaining power due to the company's dominant market position and lack of alternative suppliers.

Bargaining Power Of Suppliers

Peabody Energy Corporation's suppliers, primarily mining equipment and transportation providers, have moderate bargaining power due to the company's significant purchasing power and the availability of alternative suppliers.

Threat Of New Entrants

The threat of new entrants in the coal mining industry is low due to the high barriers to entry, including significant capital requirements, regulatory hurdles, and environmental concerns.

Intensity Of Rivalry

The coal mining industry is highly competitive, with several major players competing for market share, leading to a high intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 8.81%
Debt Cost 9.04%
Equity Weight 91.19%
Equity Cost 9.04%
WACC 9.04%
Leverage 9.66%

11. Quality Control: Peabody Energy Corporation passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

29.02$

Current Price

29.02$

Potential

-0.00%

Expected Cash-Flows