This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Earnings Preview: Peabody 4Q Profits Seen Lower

By JIM SUHR

ST. LOUIS (AP) â¿¿ Peabody Energy Corp., the world's biggest private-sector coal company, is expected to post lower earnings compared to a year ago, when it reports fourth-quarter results before the stock market opens Tuesday.

WHAT TO WATCH FOR: U.S. coal producers like Peabody struggled last year as historically low natural gas prices prompted many utilities to use it instead of coal for fuel, though Peabody said recently that electricity providers increasingly are switching back to coal.

Last month, Peabody announced that it expects a drop in coal prices and higher costs to result in "trough" earnings for the first-quarter, but its results should improve as this year progresses. The company forecast its first-quarter Australian costs to rise about 10 percent, while pricing of metallurgical coal used to make steel is expected to be down from levels of 2012's final three months, crimped by slower global demand for steel.

St. Louis-based Peabody expects its U.S. coal sales to fall by about 2 million tons as a result of lower market demand, with U.S. coal pricing expected to be down about 5 percent.

Underscoring the industry's headwinds, Goldman Sachs analyst Andre Benjamin, in a bearish research note last month, said he does not expect coal prices to return to more normal prices until the second half of 2014, instead of this year's final three months as previously expected.

Muddying matters is uncertainty about what lies in store for the industry during in the second term of President Barack Obama, who during his recent inaugural address said climate change was a priority. A series of environmental regulations proposed by the Obama administration could reduce the nation's coal use in addition to the pullbacks tied to competition from natural gas.

On the legislative front, federal lawmakers this month asked the Department of Interior to review by Feb. 4 whether companies are shortchanging federal and state governments on millions of dollars in royalties on coal exported to foreign markets. That move comes as U.S. coal exports hit record levels last year â¿¿ an estimated 124 million tons, according to Department of Energy projections.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG

Markets

DOW 17,656.84 +60.49 0.34%
S&P 500 2,063.26 +5.62 0.27%
NASDAQ 4,982.36 +23.8920 0.48%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs