Coal (LUK25) was once the largest source of electricity generation in America, but its dominance has steadily eroded for more than a decade. Now, President Donald Trump’s administration is making a decisive move to reverse that course. Through an executive order on April 8, it is preparing to “shovel” taxpayer money into the coal industry, aiming to resurrect the fossil fuel after years of decline.
The effort goes beyond financial support. Coal is being reclassified as a “critical mineral,” a designation that could open doors for regulatory advantages. Federal land, previously restricted, is once again available for new mining leases. Even shuttered coal plants, once symbols of the industry’s downturn, may soon roar back to life.
The spotlight now falls on coal producers, particularly Peabody Energy (BTU), a company engaged in the coal mining business. On April 8, BTU climbed nearly 9.2%, reflecting renewed investor interest.
About Peabody Stock
Supplying both thermal and metallurgical coal to power plants, industrial users, and steelmakers, Saint Louis–based Peabody Energy (BTU) is one of the world’s top coal producers. With a market cap of $1.55 billion, its business goes beyond mining to include coal marketing, brokerage, and transportation services.
The recent executive order from the Trump administration has thrown a lifeline to the struggling coal sector, and Peabody is feeling the early winds of change. After tumbling 48.4% over the past year, BTU stock surged by 15.5% in just five days.
The rally arrives at a time when the stock trades at only 0.32 times its sales, well below the industry average of 1.16x and its own five-year average of 0.52x. Such a steep discount hints at meaningful upside potential as broader market sentiment steadies and energy policy shifts unfold.
Peabody also continues to reward its investors. At present, the company’s annualized forward dividend of $0.30 offers a yield of 2.5%, adding steady income to the investment story.
A Closer Look at Peabody’s Q4 Earnings
Over the past year, the company has turned a sharp corner, steering its efforts toward ramping up metallurgical coal production, a cornerstone in steelmaking across the globe. The strategic pivot, while promising in the long haul, weighed heavily on its short-term performance.
On Feb. 6, the company laid its cards on the table with the Q4 2024 earnings results. Revenue slipped 9.1% year over year to $1.1 billion, though it still managed to outpace analyst expectations. Adjusted EBITDA clocked in at $176.7 million, marking a 48.8% decline from the previous year.
The real blow came in net income attributable to common stockholders, which nosedived 84.1% to $30.6 million. EPS mirrored that drop, falling 81.2% year over year to $0.25, missing Wall Street forecasts. As the curtain closed on Dec. 31, 2024, its cash and cash equivalents stood firm at $700.4 million.
Zooming out to the full year, revenue contracted 14.4% from the prior year to $4.2 billion. Net income took a steeper fall, plummeting 51.2% to $370.9 million in 2024. These setbacks are par for the course in capital-heavy transitions, especially given metallurgical coal’s longer ramp-up cycle compared to thermal coal.
Although this transitional phase poses short-term challenges, it is expected to help the company achieve higher margins in the long term. Analysts right now expect the company’s fiscal 2025 EPS to decline 24.7% year over year to $2.07. However, fiscal 2026 is expected to see a jump of 117.9% in its bottom line reaching $4.51.
What Do Analysts Expect for Peabody Stock?
The Trump administration’s push to revitalize the coal industry could play in BTU’s favor. Analysts are showing strong confidence in BTU, with a consensus rating of “Strong Buy.” All four analysts tracking the stock have given it their full endorsement, suggesting the stock is a “Strong Buy” despite the recent challenges it has faced.
The average price target of $24.25 represents potential upside of 105%, while the Street-high target of $27 signals a possible surge of 128% from current levels. These targets reflect a belief that the company’s recent strategic shift could pay off in the long term.
