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TheStreet Open House

What to Expect When Peabody Energy (BTU) Reports Second-Quarter Earnings Tuesday

NEW YORK (TheStreet) -- Peabody Energy  (BTU) reports its second-quarter earnings on Tuesday before the market opens, and here's what analysts are expecting.

The consensus estimate calls for Peabody to report a loss of 29 cents a share on revenue of $1.64 billion. Forbes reported a diluted loss per share of 18 cents on revenue of $1.63 billion in the first quarter.

The stock hit a 52-week low of $15.08 on Monday ahead of the Tuesday report. Peabody was down 3.37% to $15.18 at 12:26 p.m.

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Separately, TheStreet Ratings team rates PEABODY ENERGY CORP as a "sell" with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate PEABODY ENERGY CORP (BTU) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally high debt management risk, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • 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 107.3% when compared to the same quarter one year ago, falling from -$23.40 million to -$48.50 million.
  • Currently the debt-to-equity ratio of 1.51 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, BTU has a quick ratio of 0.61, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • The gross profit margin for PEABODY ENERGY CORP is rather low; currently it is at 15.22%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.98% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to $54.10 million or 80.08% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • In its most recent trading session, BTU has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • You can view the full analysis from the report here: BTU Ratings Report

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

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.

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