Peabody Earnings Reflect Relative Strength in Coal (BTU)
Posted on | October 16, 2008 Time: 4:46 pm |
Peabody crushed expectations today by reporting EPS of $1.36 vs estimates of $.87, and revenues of $1.91 billion vs. estimates of $1.71b
Top-line growth was a huge beat on a percentage basis, and reflective of higher volumes for Peabody - 66 million tons of production was up about 6% YoY. Average contract prices were up 114% over ‘07 levels and 66% year-to-date.
No huge surprises here, but as we are finding this earnings season, it’s all about the guidance companies do or don’t provide. Peabody noted that spot prices for coal have dropped considerably since Sept. 30, with some rates down over 25% in just two weeks. However, Peabody feels that global supplies will remain tight enough to preserve pricing, and the company raised EPS guidance for the full year.
Most of 2009 production has already been priced, with only 15-20 million tons not under contract. It also has unpriced volumes at its Australia operations, which produces a more profitable type of metallurgical coal.
Shares were up 15% today against a (currently) flat market. Of course, stretch that chart out over say, I don’t know a week, and shares are down about 40%. Such is the nature of a market where the VIX just hit $80 intra-day. Unbelievable volatility. On a slightly sentimental note, this was the first position I added to the Secular Trends Portfolio, so it’s nice to see the stock finally get some buying interest today. May the trend continue…
Ryan Barnes
Comments
About
Pragmatic commentary on U.S. & global investing, demographics & secular trends, and the valuation of anything worth valuing. Objective, unbiased research; We believe in minimal design, zero gimmicks, and maximum results.
Subscribe to feed
Search
Secular Trends Holdings
- Secular Trends Portfolio Real-Time Positions
- The Fuel That Fed the Subprime Meltdown (Written in September 2007)
- Performance Studies on the DJIA & Fundamental Value Stocks (11/22/08)
- Las Vegas Sands - Are They Sustainable in 2009? (Published 11/15/08)
Older Posts That Folks Seem to Like
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 2.0 Generic License.