Peabody Energy (BTU) Moves 24.5% Higher: Will This Strength Last?

Peabody Energy (BTU) shares soared 24.5% in the last trading session to close at $10.01. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 5.3% loss over the past four weeks.

Peabody Energy with its high quality coal production is poised to benefit from improving seaborne thermal and met coal demand as gradual recovery from the pandemic across the globe is resulting in fresh customer demand. Improving steel production in the European and Asian countries has also created opportunities for Peabody to export high quality met coal.

The high natural gas price in the United States has resulted in increasing usage of coal in power sector for electricity generation in the United States. Peabody with its high quality thermal mines is poised to gain from increase in domestic thermal coal demand.  

This coal mining company is expected to post quarterly loss of $0.80 per share in its upcoming report, which represents a year-over-year change of +37%. Revenues are expected to be $686 million, up 9.5% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Peabody Energy, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on BTU going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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By Matt Earle

Matthew Earle is the Founder of MiningFeeds. In 2005, Matt founded MiningNerds.com to provide data and information to the mining investment community. This site was merged with Highgrade Review to form MiningFeeds. Matt has a B.Sc. degree with a minor in geology from the University of Toronto.

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