Peabody Energy (BTU) Strong On High Relative Volume Today

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.

Trade-Ideas LLC identified Peabody Energy ( BTU) as a strong on high relative volume 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 $41.7 million.
  • BTU has traded 2.8 million shares today.
  • BTU is trading at 4.64 times the normal volume for the stock at this time of day.
  • BTU is trading at a new high 8.17% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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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 0.3%. Currently there are 7 analysts that rate Peabody Energy a buy, 3 analysts rate it a sell, and 7 rate it a hold.

The average volume for Peabody Energy has been 13.4 million shares per day over the past 30 days. Peabody Energy has a market cap of $888.9 million and is part of the basic materials sector and metals & mining industry. The stock has a beta of 2.71 and a short float of 29.3% with 5.60 days to cover. Shares are down 58.7% year-to-date as of the close of trading on Monday.

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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 deteriorating net income, generally high debt management risk, disappointing return on equity, poor profit margins and weak operating cash flow.

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 264.1% when compared to the same quarter one year ago, falling from -$48.50 million to -$176.60 million.
  • The debt-to-equity ratio is very high at 2.55 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. 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.
  • 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 14.06%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -11.48% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to $3.40 million or 93.71% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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