"We reiterate our buy recommendation and believe Peabody is well positioned to take advantage of growing coal demand from China. BTU is trading at a 50% discount to our 2013E PMV of $61 which gives the company a significant margin of safety," Gabelli analysts wrote in a report Tuesday.
Shares of Peabody Energy hit a 52-week low on Wednesday of $28.18. The stock's 52-week high of $73.95 was set on April 4.Peabody Energy has an estimated price-to-earnings ratio for next year of 6.61 times; the average for coal companies is 12.21. For comparison, both Walter Energy (WLT) and Consol Energy (CNX) have higher forward P/Es of 8.02 and 11.33, respectively. Twenty-two of the 30 analysts who cover Peabody Energy rated it buy. Six analysts gave the stock a hold rating and two rated it sell. TheStreet Ratings gives Peabody Energy a C+ grade and a hold rating. The stock has fallen 13.77% year to date.