Peabody Energy
BTU
$16.02
-5.88%
Peabody Energy Corporation is one of the world's largest private-sector coal producers, mining and marketing metallurgical (steelmaking) and thermal (power-generation) coal across seaborne markets and U.S. basins including the Powder River Basin, with additional coal and freight trading operations. The company is a pure-play legacy-energy operator whose competitive identity rests on scale in seaborne met coal and low-cost U.S. thermal assets, positioning it as a high-beta cyclical rather than a growth franchise. The current investor debate is sharply polarized: a 2026 U.S. policy shift that could extend coal-plant lives and geopolitical LNG disruption briefly drove a mid-year rally, but the narrative has since flipped decisively bearish after a Q2 2026 earnings miss in which the net loss came in more than triple consensus estimates, reviving structural concerns about the clean-energy transition. Recent news flow captures the whipsaw — a 15% single-week jump on supportive policy in June followed by a brutal post-earnings selloff in late July and a further capitulation into early November — leaving investors to weigh deep cyclical value against terminal-demand risk.…
BTU
Peabody Energy
$16.02
Related headlines
Investment Opinion: Should I buy BTU Today?
Rating: Hold, with a speculative-recovery tilt. The core thesis is that BTU's balance sheet (debt-to-equity of 0.145, current ratio of 1.85, $452.5 million trailing free cash flow) and a 0.61x forward PE on the $2.47 consensus EPS mean the market has already priced a severe downcycle, but negative gross margins (-7.18% in Q2 2026) and a stock at its 180-day low of $17.02 mean there is no evidence yet that the earnings trough has passed. The 4-analyst consensus tilts roughly 3-to-1 Buy/Neutral with no explicit Sells, and B. Riley upgraded to Buy on October 26, 2026, but precise price targets are not disclosed, so implied upside cannot be quantified and the rating must rest on valuation and fundamentals rather than target math.
Supporting evidence is genuinely two-sided. On valuation, the 0.94x PS and 1.02x P/B sit roughly 40-60% below the 1.5-3.0x sales and 1.5-2.5x book typical of quality energy peers, and PS has collapsed from 4.13x in Q1 2026 and 2.81x two quarters ago. Revenue is still growing 12.71% year-over-year ($1.003 billion vs. $890.1 million), and trailing free cash flow of $452.5 million — including $258.1 million in Q2 2026 alone — shows the business still generates cash despite GAAP losses. But profitability has broken down: gross profit swung from +$108.6 million in Q1 2026 to -$72.0 million in Q2 2026, net margin is -1.37% trailing, and the EV/EBITDA of 8.24x is only market-average because EBITDA collapsed to $26 million from $127.1 million in Q4 2025.
The biggest risks that would invalidate even a Hold are a structural rather than transitory margin collapse, continued seaborne met and thermal price weakness, and the thin 4-analyst coverage that produced a -17.62% single-day crash and a -56.91% max drawdown. This Hold would upgrade to Buy if gross margin turns positive for two consecutive quarters and the stock establishes a base above the $20.66 prior close, or if seaborne met coal pricing inflects enough to make the low-end $2.03 EPS credible. It would downgrade to Sell if Q3 gross margin stays negative or revenue breaks below the ~$973 million Q1 2026 trough. Verdict: deeply discounted versus its own history and peers, but fairly-to-appropriately priced for a company with negative gross margins and terminal-demand risk — a value trap until margins confirm a turn.
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BTU 12-Month Price Forecast
BTU presents a classic deep-cyclical value-versus-value-trap setup: the 0.61x forward PE and 0.94x PS imply the market assigns near-zero probability to the $2.47 consensus EPS, while the fortress balance sheet (D/E 0.145) and $452.5 million trailing free cash flow mean the company can survive a prolonged trough. The decisive variable is whether the Q2 2026 gross margin collapse to -7.18% was a transitory cost and pricing shock or the start of structural margin erosion — the 60% spread in analyst EPS estimates ($2.03 to $3.25) shows even the sell side cannot agree. With only 4 analysts, price discovery is inefficient and the -17.62% single-day crash on November 4 argues the market is not yet convinced a floor has formed. I would upgrade to bullish if gross margin turns positive for two consecutive quarters and price reclaims the $20.66 prior close, and downgrade to bearish if Q3 gross margin stays negative or revenue breaks below the ~$973 million Q1 2026 trough.
Wall Street consensus
Coverage is thin at just 4 analysts, and the consensus leans cautiously constructive despite the price collapse: the average FY EPS estimate of $2.47 (range $2.03-$3.25) and average revenue estimate of $4.59 billion (range $4.42B-$4.81B) imply analysts still expect a meaningful earnings rebound from the current loss-making run rate. Institutional ratings show a mixed but recently improving tilt — B. Riley upgraded to Buy from Neutral on October 26, 2026, Benchmark has held Buy, Freedom Broker has held Buy, while UBS has stayed Neutral throughout 2026 — yielding roughly a 3-to-1 Buy/Neutral split with no explicit Sells. Precise price targets are not disclosed in the provided data, so implied upside cannot be calculated; however, with the stock at $17.02 against a forward EPS estimate of $2.47, the implied forward multiple of 0.61x suggests analysts see substantial recovery value if their estimates hold.\n\nThe wide EPS estimate range ($2.03 to $3.25, a 60% spread from low to high) signals high uncertainty about coal price realizations and cost control. The high-end estimate likely assumes seaborne met coal and thermal prices recover, policy support extends plant lives, and the Q2 cost blowout proves transitory; the low end prices in continued margin compression, weak seaborne pricing, and the structural demand decline flagged in recent coverage. The B. Riley upgrade just nine days before the -17.62% single-day crash is a notable timing miss that undermines confidence in the bullish camp's near-term read. With only 4 analysts, limited institutional coverage implies higher volatility and less efficient price discovery — consistent with the -56.91% drawdown — and investors should treat consensus estimates with more caution than they would for a widely covered large-cap.
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Bulls vs Bears: BTU Investment Factors
The bear case currently holds stronger evidence: BTU has negative gross margins (-7.18%), a Q2 loss triple consensus, and a stock at its 180-day low with accelerating downside momentum (-33.25% in one month). The bull case rests almost entirely on mean reversion — a 0.61x forward PE, 0.94x PS versus 2.81x two quarters ago, and a fortress balance sheet (D/E 0.145, $452.5M trailing FCF) — which is a bet on coal price recovery rather than evidence of it. The single most important tension is whether the Q2 2026 margin collapse is transitory (cost blowout, weak seaborne pricing) or structural (terminal demand decline); if transitory, the $2.47 EPS estimate is achievable and the stock is deeply undervalued, but if structural, the forward multiple is a mirage and the discount is deserved. Until gross margins turn positive and price confirms a floor, the weight of evidence favors caution over conviction.
Bullish
- Deep discount to own history and sector: BTU trades at a PS ratio of 0.94x versus 2.81x in Q2 2026's reported period and 4.13x in Q1 2026, roughly a third of where it stood two quarters ago. The 1.02x P/B sits well below the 1.5-2.5x typical for quality energy peers, implying a roughly 40-60% discount to sector norms.
- Analysts still model a sharp earnings rebound: The 4-analyst consensus FY EPS estimate of $2.47 (range $2.03-$3.25) against a $17.02 price implies a forward multiple of just 0.61x. Ratings tilt 3-to-1 Buy/Neutral with no explicit Sells, and B. Riley upgraded to Buy on October 26, 2026.
- Low leverage and real cash generation: Debt-to-equity of only 0.145 and a current ratio of 1.85 give BTU substantial balance-sheet cushion through the downcycle. Trailing free cash flow of $452.5 million (including $258.1 million in Q2 2026 alone) shows the business still throws off cash despite GAAP losses, aided by $121.3 million of quarterly D&A.
- Revenue still growing double digits: Q2 2026 revenue of $1.003 billion rose 12.71% year-over-year versus $890.1 million in Q2 2025, with thermal coal at $617.6 million and met coal at $358.2 million. Top-line resilience suggests the loss is a margin/pricing problem rather than a demand collapse.
Bearish
- Margins have turned outright negative: Q2 2026 gross margin was -7.18% with gross profit of -$72.0 million, a dramatic reversal from +11.16% in Q1 2026 and 17.8% in Q1 2025. For a coal producer, this signals selling coal at or below cost of production in key segments, versus the 22-43% gross margins BTU printed in 2022-2023.
- Earnings miss was catastrophic: Q2 2026 net loss of -$90.6 million came in more than triple consensus estimates, with EPS of -$0.74 and a -9.03% net margin. The stock crashed -17.62% on November 4 on 9.26 million shares, a capitulation-style move that argues the market does not believe the $2.47 forward EPS.
- Falling knife at 180-day low: At $17.02 the stock sits at 0% of its 180-day range ($17.02-$31.21), down 42.11% over one year and 44.52% YTD versus SPY's +13.56%. The 1-month decline of -33.25% is steeper than the 6-month -27.85%, meaning selling is accelerating with no technical support beneath.
- Valuation signals a value trap: A sub-1x forward PE of 0.61x on a coal miner is a classic value-trap signal, and the EV/EBITDA of 8.24x is inflated by collapsed EBITDA ($26 million in Q2 2026 versus $127.1 million in Q4 2025). The market is explicitly pricing skepticism that forward estimates materialize.
BTU Technical Analysis
Peabody is locked in a severe, sustained downtrend, with the stock down 42.11% over the trailing year and 44.52% year-to-date, dramatically underperforming a SPY that gained 13.56% over the same twelve months (relative strength of -55.67%). The current price of $17.02 sits at the very bottom of its 180-day range, which ran from a $17.02 low to a $31.21 high set on June 4 — meaning the stock is trading at 0% of its 52-week range, a classic falling-knife configuration rather than a value-entry setup. The max drawdown of -56.91% confirms the scale of capital destruction, and with the prior close at $20.66, the stock is now probing for a floor with no established support beneath it.\n\nShort-term momentum has deteriorated violently and is accelerating to the downside: the 1-month change of -33.25% and 3-month change of -27.64% are both worse than the 6-month decline of -27.85%, indicating the selling is intensifying rather than stabilizing. The single-session collapse of -17.62% on November 4, on elevated volume of 9.26 million shares, is a capitulation-style move that typically signals forced liquidation or a fundamental shock rather than routine profit-taking. Critically, the 1-month trend (-33.25%) is now diverging sharply from an already-negative 1-year trend (-42.11%), a pattern that historically signals either a climactic washout bottom or the onset of a new leg lower — the volume spike argues the former is at least possible, but price has yet to confirm any reversal.\n\nWith the stock at its 180-day low of $17.02, there is no technical support from recent price history — the next reference points are psychological round numbers and prior-cycle lows not visible in this dataset. Resistance is layered far overhead: the $20.66 prior close, the $22-23 congestion zone from September-October, and the $31.21 June high, which now represents an 83% recovery requirement. Beta is not available in the provided data, but the -56.91% drawdown against a modestly positive market and the -17.62% single-day move imply volatility far in excess of the broader index, warranting materially smaller position sizing and wider stops for anyone attempting to catch this falling knife.
Beta
—
—
Max Drawdown
-59.4%
Largest decline past year
52-Week Range
—
Price range past year
Annual Return
-44.9%
Cumulative gain past year
| Period | BTU Return | S&P 500 |
|---|---|---|
| 1m | -37.0% | -5.9% |
| 3m | -32.7% | -5.2% |
| 6m | -32.1% | -0.6% |
| 1y | -44.9% | +8.2% |
| ytd | -47.8% | +7.5% |
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BTU Fundamental Analysis
Revenue is growing at the top line but the quality is deteriorating: Q2 2026 revenue of $1.003 billion rose 12.71% year-over-year versus $890.1 million in Q2 2025, yet the sequential trend shows stagnation around the $1.0 billion mark across Q4 2025 ($1.022B), Q1 2026 ($973.3M) and Q2 2026 ($1.003B). Segment data shows thermal coal at $617.6 million and metallurgical coal at $358.2 million driving the top line, with product/other at just $27.4 million — meaning the company is overwhelmingly levered to commodity price realizations rather than volume growth. The 12.71% revenue growth alongside a swing to a deep loss implies pricing or cost dynamics are crushing margins, undermining the investment case for anyone hoping top-line growth translates to earnings.\n\nProfitability has collapsed: Q2 2026 net income was -$90.6 million (a -9.03% net margin) with gross profit of -$72.0 million and a gross margin of -7.18%, a dramatic reversal from Q1 2026's +$108.6 million gross profit (11.16% margin) and Q4 2025's +$49.7 million (4.86% margin). The trailing figures are equally grim — net margin of -1.37%, operating margin of just 0.016%, and a gross margin of 2.73% — versus the 17.8% gross margin posted in Q1 2025, illustrating a multi-quarter compression that has now turned negative. For a coal producer, single-digit gross margins are far below the 20-40% range typical in healthy commodity upcycles (BTU itself printed 22-43% gross margins in 2022-2023), signaling the company is currently selling coal at or below the cost of production in key segments.\n\nThe balance sheet is the one genuine bright spot: debt-to-equity of just 0.145 and a current ratio of 1.85 indicate low leverage and adequate liquidity, while trailing free cash flow of $452.5 million (with $258.1 million generated in Q2 2026 alone) shows the business still throws off cash despite GAAP losses, aided by $121.3 million in quarterly D&A. Cash stood at $526.3 million at Q2-end, and the company repaid $139.3 million of debt in the quarter while spending $337.7 million on acquisitions — an aggressive capital allocation stance. However, ROE of -1.50% and a Q1 2026 quarter with negative $92.5 million free cash flow underscore that cash generation is volatile and the low debt ratio partly reflects a shrunken equity base; the company can fund itself internally today, but a prolonged downcycle would test that buffer.
Quarterly Revenue
$1.0B
2026-06
Revenue YoY Growth
+12.7%
YoY Comparison
Gross Margin
-7.2%
Latest Quarter
Free Cash Flow
$452500000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is BTU Overvalued?
Because trailing net income is negative (EPS of -$0.0146, trailing PE of -69.07), the PE ratio is not meaningful, so the primary metric selected is the price-to-sales ratio of 0.94x, supplemented by EV/EBITDA of 8.24x and price-to-book of 1.02x. The forward PE of 0.61x — derived from consensus FY EPS of $2.47 — implies the market is pricing either an extraordinary earnings recovery or deep skepticism that those estimates are achievable; a sub-1x forward multiple on a coal miner is a classic value-trap signal rather than a bargain. The enormous gap between the meaningless trailing PE and the 0.61x forward figure tells the whole story: the market does not believe the forward earnings will materialize.\n\nOn a peer basis, a 0.94x PS ratio and 1.02x P/B sit at deep discounts to the broader Energy sector, where integrated majors and quality E&Ps typically trade at 1.5-3.0x sales and 1.5-2.5x book, implying a roughly 40-60% discount to sector norms. The EV/EBITDA of 8.24x is closer to market-average territory but is inflated by depressed EBITDA ($26 million in Q2 2026 versus $127.1 million in Q4 2025), meaning the multiple is high precisely because the denominator has collapsed. This discount is not unjustified: negative net margin (-1.37%), a -7.18% quarterly gross margin, and terminal-demand risk from the energy transition mean BTU deserves a structural discount to diversified energy peers — the question is whether a 60% haircut is too harsh.\n\nHistorically, BTU's own valuation band has compressed dramatically: PS ratio was 2.81x in Q2 2026's reported period, 4.13x in Q1 2026, and 3.19-3.52x through 2025, versus the current 0.94x — near the bottom of its multi-year range and roughly a third of where it traded just two quarters ago. P/B has fallen from 1.15x in Q1 2026 to 1.02x now, and the historical PE swung from 86.3x in Q4 2025 to negative territory, reflecting earnings whipsaw rather than stable re-rating. Trading at the low end of its own historical band suggests the market is pricing in fundamental deterioration and skepticism about the forward EPS recovery — a potential value opportunity only if coal prices inflect, but a warning sign if the downcycle proves structural.
PE
-69.1x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 1x~21x
vs. Industry Avg
15.5x
Industry PE ~15.5x*
EV/EBITDA
8.2x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks are acute. Q2 2026 gross margin of -7.18% and a -$90.6 million net loss show the company is currently unable to cover production costs in key segments, and the sequential revenue stagnation around $1.0 billion (Q4 2025 $1.022B, Q1 2026 $973.3M, Q2 2026 $1.003B) means there is no volume offset to weak pricing. Cash generation is volatile — Q1 2026 free cash flow was negative $92.5 million versus +$258.1 million in Q2 2026 — and the low 0.145 debt-to-equity ratio partly reflects a shrunken equity base (ROE -1.50%), while $337.7 million of Q2 acquisition spending and $139.3 million of debt repayment consumed liquidity that a prolonged downcycle would need.
Market and competitive risks center on valuation compression and structural demand. The EV/EBITDA of 8.24x looks market-average only because EBITDA collapsed to $26 million in Q2 2026 from $127.1 million in Q4 2025, so any further earnings deterioration pushes the multiple higher, not lower. Coal faces terminal-demand risk from the clean-energy transition, and BTU's revenue is overwhelmingly commodity-price levered (thermal $617.6M, met $358.2M, product/other just $27.4M), leaving no diversification buffer. With only 4 analysts covering the name, price discovery is inefficient and headline-driven — the -17.62% single-day move and -56.91% max drawdown imply volatility far in excess of the index, warranting materially smaller position sizing.
The worst-case scenario is a structural downcycle in which seaborne met and thermal prices stay depressed, gross margins remain negative, and the $2.47 consensus EPS proves unreachable, forcing estimate cuts and further multiple compression. In that chain, the stock has no technical support beneath $17.02 (its 180-day low), and a retest of prior-cycle lows or a move toward the low-end EPS estimate of $2.03 at a compressed multiple could take shares down another 25-40% from current levels. From $17.02, a decline to the $10-$12 zone — consistent with the scale of the -56.91% max drawdown repeating — would represent roughly -30% to -40% additional loss for anyone buying today.
FAQ
The most severe risk is financial: Q2 2026 gross margin turned negative at -7.18% with a -$90.6 million net loss, meaning BTU is currently selling coal at or below cost in key segments, and free cash flow is volatile (negative $92.5 million in Q1 2026 versus +$258.1 million in Q2 2026). Second is structural demand risk — the clean-energy transition is a terminal headwind for thermal coal, which at $617.6 million is the largest revenue segment, and there is no diversification buffer since product/other is just $27.4 million. Third is valuation/estimate risk: the 60% spread between the $2.03 low and $3.25 high EPS estimates shows even four analysts cannot agree, and any cut to consensus would push the already-inflated 8.24x EV/EBITDA higher. Fourth is market-structure risk: with only 4 analysts, price discovery is inefficient, evidenced by the -17.62% single-day crash on November 4 and the -56.91% max drawdown, so position sizing must be materially smaller than for a widely covered large-cap.
The 12-month forecast splits into three scenarios. The base case (50% probability, $19-23) assumes coal prices stabilize modestly, gross margins recover into low-to-mid single digits, and BTU earns a fraction of the $2.47 consensus EPS — enough for a partial re-rating from 0.94x PS but not a return to prior multiples. The bull case (25%, $28-31) requires seaborne met and thermal price recovery plus policy support extending coal-plant lives, restoring gross margins to the 11-18% range and re-rating the stock toward its June 4, 2026 high of $31.21. The bear case (25%, $10-14) assumes margins stay negative, the $2.47 EPS proves unreachable, and estimate cuts drive a retest of prior-cycle lows with no support beneath $17.02. The base case is most likely because it requires only stabilization rather than recovery, and its key assumption is that the Q2 2026 cost blowout was transitory rather than the start of structural margin erosion.
BTU screens as deeply undervalued on every relative measure: 0.94x PS, 1.02x P/B, and 0.61x forward PE, versus the 1.5-3.0x sales and 1.5-2.5x book typical of quality energy peers — a roughly 40-60% discount to sector norms. Against its own history the compression is even starker, with PS falling from 4.13x in Q1 2026 and 2.81x two quarters ago to under 1x today. However, the trailing PE of -69.07 is meaningless because EPS is negative (-$0.0146), and the EV/EBITDA of 8.24x only looks market-average because EBITDA collapsed to $26 million in Q2 2026 from $127.1 million in Q4 2025. The market is therefore pricing skepticism that the $2.47 consensus EPS is achievable — a sub-1x forward multiple on a coal miner is a classic value-trap signature. The honest verdict is that BTU is cheap relative to its history and peers but arguably fairly priced for a company with negative gross margins and terminal-demand risk; the discount closes only if margins inflect.
From a pure risk/reward standpoint, BTU offers an asymmetric but unconfirmed setup: at $17.02 the stock trades at 0.61x the $2.47 consensus FY EPS and 0.94x sales, versus PS ratios of 2.81x two quarters ago and 4.13x in Q1 2026, implying the market assigns near-zero probability to analyst estimates. The downside is equally concrete — the stock sits at its 180-day low with no technical support beneath it, and a repeat of the -56.91% max drawdown would take shares toward the $10-12 zone, roughly -30% to -40% from here. The balance sheet (D/E 0.145, $452.5 million trailing FCF) means bankruptcy risk is low, so this is a timing and margin-recovery question rather than a solvency one. It is a reasonable speculative buy only for investors who can tolerate a further 30-40% drawdown and who wait for confirmation — specifically a positive Q3 2026 gross margin and a reclaim of the $20.66 prior close — rather than catching the falling knife at $17.02.
BTU is a cyclical trading vehicle more than a long-term compounder: revenue has stagnated around $1.0 billion per quarter for four straight quarters, gross margins have swung from 17.8% in Q1 2025 to -7.18% in Q2 2026, and the dividend yield of just 1.01% with a negative payout ratio (-0.69) offers no income support. Earnings visibility is poor — the 60% spread in analyst EPS estimates and the -17.62% single-day crash on November 4 illustrate how headline-driven the stock is, and the -56.91% max drawdown shows the tail risk of holding through a full downcycle. A concrete minimum holding period of 12-18 months is appropriate, long enough to span at least two quarterly reports and confirm whether gross margins recover. Short-term traders should note the stock is at its 180-day low with no support beneath $17.02, making it a momentum-short rather than a momentum-long until a base forms above the $20.66 prior close.