Today's Dead Cat Bounce Stock Is Peabody Energy (BTU)
Trade-Ideas LLC identified
(
) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Peabody Energy 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 $25.8 million.
- BTU has traded 50,512 shares today.
- BTU is up 5.2% today.
- BTU was down 5.8% yesterday.
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More details on BTU:
Peabody Energy Corporation offers 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 6.8%. Currently there are 3 analysts that rate Peabody Energy a buy, 5 analysts rate it a sell, and 7 rate it a hold.
The average volume for Peabody Energy has been 1.2 million shares per day over the past 30 days. Peabody Energy has a market cap of $287.3 million and is part of the basic materials sector and metals & mining industry. The stock has a beta of -1.10 and a short float of 33.6% with 3.69 days to cover. Shares are down 87.4% year-to-date as of the close of trading on Friday.
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Analysis:
rates Peabody Energy as a
. 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 against the S&P 500 and did not exceed that of the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 102.3% when compared to the same quarter one year ago, falling from -$150.60 million to -$304.70 million.
- The debt-to-equity ratio is very high at 4.81 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.46, which clearly demonstrates the inability to cover short-term cash needs.
- 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 currently extremely low, coming in at 11.62%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -21.47% is significantly below that of the industry average.
- BTU's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 90.43%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
- You can view the full Peabody Energy Ratings Report.
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