Peabody Energy (BTU) Off To A Strong Start In Pre-Market Activity

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 ( BTU) as a pre-market leader 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 $215.7 million.
  • BTU traded 1.4 million shares today in the pre-market hours as of 9:27 AM.
  • BTU is up 7% today from Friday's close.

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More details on BTU:

Peabody Energy Corporation is engaged 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 2.5%. Currently there are 10 analysts that rate Peabody Energy a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Peabody Energy has been 6.8 million shares per day over the past 30 days. Peabody Energy has a market cap of $3.7 billion and is part of the basic materials sector and metals & mining industry. The stock has a beta of 2.19 and a short float of 10.6% with 2.74 days to cover. Shares are down 31.9% year-to-date as of the close of trading on Friday.

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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 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 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 181.1% when compared to the same quarter one year ago, falling from $90.40 million to -$73.30 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 0.63, 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 16.52%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -4.16% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to $21.20 million or 64.48% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 28.55%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 171.79% 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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