Peabody Energy (BTU) Stock Sinking on Rising Insurance Cost Concerns

NEW YORK (TheStreet) -- Shares of Peabody Energy Corp. (BTU) are down by 7.01% to $2.59 on heavy volume in mid-afternoon trading on Friday, due to concerns that coal companies will be required to pay more for insurance that covers environmental damage, Bloomberg reports.

So far today, 15.46 million shares of Peabody Energy have exchanged hands as compared to its average daily volume of 13.67 million shares.

The Wyoming Department of Environmental Quality's Land Quality Division is looking over financial data from 2014 from Peabody and fellow coal company Arch Coal (ACI) in order to determine if they still qualify for a "self-bonding" program, Bloomberg added.

This program allows producers of coal to inexpensively insure their clean-up costs in case of a bankruptcy.

Miners that cannot meet specific financial benchmarks have to buy instruments including corporate surety bonds and treasury bills, or the must hang onto enough cash to cover reclamation liabilities, according to Bloomberg.

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

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