Bear of the Day: Peabody Energy (BTU)

Peabody Energy Company Overview

Zacks Rank #5 (Strong Sell) company Peabody Energy (BTU) is one of the world’s largest coal companies. The St. Louis, Missouri-based company provides coal used to produce electricity to industrial customers in more than 25 countries. BTU has majority ownership in a mix of 17 surface and underground coal mining operations in the United States and Australia. Peabody operates its business among two primary segments, including:

·       Thermal Coal: Peabody provides high-quality thermal coal to domestic and international buyers. Thermal coal is used for electricity generation and is mainly sold to utility companies through long-term contracts.

·       Seaborne Metallurgical Coal: Met coal is an essential ingredient needed to produce steel. Peabody mainly exports its met coal to Asian buyers who use it for infrastructure projects.

Over the past few years, BTU has been working to diversify its business into a more balanced mix by selling more met coal. Currently, met revenue accounts for roughly a third of total revenue.

Solar Overtakes Coal Energy Production for the 1^st Time

Few, if any, on Earth know more about energy and clean energy than Tesla (TSLA) and SpaceX (SPCX) CEO Elon Musk. For years, Musk has touted solar energy, saying things like:

“Solar is everything. Other energy sources are a waste of time, like a caveman throwing some twigs into the fire.”

“Once you understand the Kardashev Scale, it becomes utterly obvious that essentially all energy will be solar.”

Although solar energy production requires higher start-up capital than coal, it is zero-emission and long-term generation costs are far lower. The latest energy production data tells the story. Solar energy accounted for 12.8% of U.S. electricity in May, surpassing coal (12.2%) for the first time in history. While low-cost natural gas remains the dominant electricity source (~37%), solar is catching up. In fact, solar and battery storage accounted for a staggering 91% of U.S. power capacity installed in Q1 2026.

Image Source: Ember

BTU Unprofitable Despite Sky-High Electricity Prices

U.S. electricity prices have been soaring due to the rapid buildout of AI data centers. However, investors wouldn’t know from BTU’s fundamentals. BTU EPS has downtrended since early 2023 and flipped negative in early 2026.

Image Source: Zacks Investment Research

Meanwhile, BTU has missed Zacks Consensus Analyst Estimates in five of the past 6 quarters.

Image Source: Zacks Investment Research

The Centurion Mine Debacle

In addition to bearish macro trends, BTU is suffering from executional errors. For instance, the Australia-based Centurion mine was touted by management as the company’s flagship location. Management expected 700,000 tons from the mine in Q1. However, Q1 production from the mine was a meager 250,000 due to mechanical and electrical issues.

BTU Underperformance is Concerning

BTU shares are exhibiting troubling relative price action. While the S&P 500 Index is up more than 7% year-to-date, BTU is down more than 20%.

Image Source: Zacks Investment Research

Bottom Line

Although electricity prices are soaring thanks to AI data center demand, Peabody Energy is struggling. Peabody earnings have downtrended and flipped negative as solar electricity production flips coal production for the first time in history.

Zacks' Research Chief Names "Stock Most Likely to Double"

Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.

This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

Source Zacks-com