Wednesday, October 22, 2014

Peabody Energy Still Faces A Tough Coal Industry


 Summary

  • Peabody Energy reported Q3'14 earnings that generally beat estimates.
  • The company continues to forecast an oversupply of coal despite solid global demand.
  • The stock remains beaten down, but it needs catalysts to turn around before it becomes a buy.
 Reading through the Peabody Energy (NYSE:BTU) quarterly transcript and the absolute numbers are horrible. The domestic coal miner continues to face an industry with short-term oversupply and promising long-term global demand scenarios. The stock remains in a downtrend, but one prime reason to not give up tracking the stock were the rebounds in the steel stocks. US Steel Group (NYSE:X) is a major user of metallurgical coal and faced a similar weak outlook back in mid-2013, yet the stock went on to soar roughly 150% in the following year. At some point, the supply and demand equation could reverse back in favor of coal miners similar to how it has for domestic steel producers.

 Read full article at Seeking Alpha

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