Trade-Ideas LLC identified

Peabody Energy

(

BTU

) as a "perilous reversal" (up big yesterday but down 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 $14.3 million.
  • BTU has traded 56,576 shares today.
  • BTU is down 3.5% today.
  • BTU was up 6.7% yesterday.

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More details on BTU:

Peabody Energy Corporation engages in the mining of coal. The company operates through Powder River Basin Mining, Midwestern U.S. Mining, Western U.S. Mining, Australian Metallurgical Mining, Australian Thermal Mining, Trading and Brokerage, and Corporate and Other segments. The stock currently has a dividend yield of 6.8%. Currently there is 1 analyst that rates Peabody Energy a buy, 8 analysts rate it a sell, and 1 rates it a hold.

The average volume for Peabody Energy has been 3.1 million shares per day over the past 30 days. Peabody Energy has a market cap of $47.5 million and is part of the basic materials sector and metals & mining industry. The stock has a beta of -0.08 and a short float of 50.6% with 2.06 days to cover. Shares are down 66.7% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Peabody Energy as a

sell

. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:

  • The debt-to-equity ratio is very high at 7.26 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 0.33, 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.
  • Looking at the price performance of BTU's shares over the past 12 months, there is not much good news to report: the stock is down 97.50%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than 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.
  • PEABODY ENERGY CORP's earnings per share declined by 10.1% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, PEABODY ENERGY CORP reported poor results of -$102.60 versus -$42.45 in the prior year. This year, the market expects an improvement in earnings (-$34.90 versus -$102.60).
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Oil, Gas & Consumable Fuels industry average. The net income has decreased by 0.7% when compared to the same quarter one year ago, dropping from -$514.60 million to -$518.00 million.

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