Why Peabody Energy's Shares Fell
Jul 24th 2012 5:24PM
Updated Jul 24th 2012 5:26PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of coal miner Peabody Energy (NYS: BTU) fell 11% today after the company released earnings.
So what: During the second quarter, revenue rose slightly to $2.0 billion, just short of the $2.06 billion analysts had expected. On the bottom line, results were even worse, with net income falling 28% to $204.7 million. Excluding special items, earnings per share were $0.51, just $0.02 below estimates, but in the third quarter, management expects earnings per share of $0.20 to $0.45, well below the current $0.65 estimate.
Now what: Peabody is the last of the coal companies to report a significant profit, but even that is evaporating. Coal stocks have been crushed all year on falling demand, and Patriot Coal's bankruptcy earlier this month was a sign of things to come for some in the industry. Peabody is nowhere near that fate right now, but with trends heading in the wrong direction it looks like a value trap, and I certainly wouldn't be a buyer today.
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The article Why Peabody Energy's Shares Fell originally appeared on Fool.com.Fool contributor Travis Hoium has no position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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