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Despite Peabody’s Strong Earnings, Coal Stocks Fall (BTU, WLT, PCX, ANR, CLD)
by Todd Shriber | April 19th | Filed in: Commodity Stocks News
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Shares of Peabody Energy (BTU), the largest U.S. coal producer, are down 2% despite a solid first-quarter earnings report. Missouri-based Peabody said it earned $176.5 million, or 65 cents a share, compared with $133.7 million, or 50 cents a share, a year earlier as revenue climbed 15% to $1.74 billion, but the revenue number missed the consensus estimate of $1.75 billion. Analysts expected a profit of 61 cents a share. The company even offered up a strong second-quarter outlook, but that isn’t proving to be enough to prevent the Coal Stocks Index from a decline of 0.6% today. The Index has slid almost 6% in the past month. Peabody said it expects an adjusted second-quarter profit of 85 cents-$1.10 a share and a full-year profit of $3.50-$4.50, but the company did leave its full-year production unchanged at 245-265 million tons of coal. The company said its first-quarter volumes in Australia were strong despite the bad weather that hit the country and that it expects volumes there to remain robust in the current quarter. Peabody has the largest Australian footprint of any U.S.-based coal producer. Looking at other coal stocks, Walter Energy (WLT) is up 1% ahead of its earnings report on Wednesday. Patriot Coal (PCX) is up fractionally. The company delivers its quarterly results on Thursday. Alpha Natural Resources (ANR) and Cloud Peak Energy (CLD) are down 1% and 3%, respectively. Both companies report earnings on May 4. Investors can track the Coal Stocks Index for performance trends and a suite of other metrics at tickerspy.com.
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April 19th, 2011 at 5:39 pm
Todd,
Please separate the mostly thermal/steam coal producers from the mostly met/steel coal producers.
These are TWO different markets, with different dynamics.
The prices for their product are vastly different.
POSCO (the South Korean steel giant) announced today that it was going to raise prices by 16-18%. Grande Cache Coal and Walter Energy are major suppliers to POSCO. Grande Cache said this week that production will be down this year because of internal problems with their mines. This means that Walter stands to benefit from these events, along with the events going on in Asia and global energy markets (the search and transport of it, not the creation of it).
So, Walter was up today. And Walter has favorable tailwinds for this quarter and possibly next quarter as well. POSCO’s price raise may actually cause a backlash effect down the road because car and appliance makers can’t pass along price increases to their customers, especially outside of China. But, makers of equipment to search for commodities (offshore rigs, FPSOs, mining equipment) should be fine because their customers are seeing higher prices for their goods and services.
Don’t lump all coal companies together.