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Trade-Ideas: Peabody Energy Corporation (BTU) Is Today's Post-Market Leader Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Peabody Energy Corporation ( BTU) as a post-market leader candidate. In addition to specific proprietary factors, Trade-Ideas identified Peabody Energy Corporation as such a stock due to the following factors:

  • BTU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $140.0 million.
  • BTU is up 2.2% today from today's close.

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More details on BTU:

Peabody Energy Corporation engages in the mining of coal. The company operates through Western U.S. Mining, Midwestern U.S. Mining, Australian Mining, Trading and Brokerage, and Corporate and Other segments. The stock currently has a dividend yield of 1.7%. Currently there are 12 analysts that rate Peabody Energy Corporation a buy, 2 analysts rate it a sell, and 6 rate it a hold.

The average volume for Peabody Energy Corporation has been 6.1 million shares per day over the past 30 days. Peabody Energy has a market cap of $5.5 billion and is part of the basic materials sector and metals & mining industry. The stock has a beta of 1.99 and a short float of 6.9% with 2.72 days to cover. Shares are down 23.8% year to date as of the close of trading on Wednesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Peabody Energy Corporation as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 160.8% when compared to the same quarter one year ago, falling from $42.90 million to -$26.10 million.
  • The debt-to-equity ratio of 1.32 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, BTU maintains a poor quick ratio of 0.76, which illustrates the inability to avoid short-term cash problems.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, PEABODY ENERGY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for PEABODY ENERGY CORP is rather low; currently it is at 20.33%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.45% trails that of the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 30.18%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 86.95% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.

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