Peabody Energy Corp. (BTU), the largest U.S. coal producer by volume, reported third-quarter earnings that beat analysts’ estimates after selling more coal from its mines in Wyoming’s Powder River Basin.
Excluding one-time items, per-share profit exceeded the 34- cent average of 25 estimates compiled by Bloomberg. Sales rose to $2.06 billion from $2.04 billion. Net income fell to $42.9 million, or 16 cents a share, from $274.1 million, or $1, a year earlier, the St. Louis-based company said today in a statement distributed by PRNewswire.
Higher natural gas prices encouraged some electricity generators to resume burning coal from the Powder River Basin, Mitesh Thakkar, an analyst at FBR & Co. in Arlington, Virginia, wrote in an Oct. 18 note. Thakkar rates the shares outperform, the equivalent of a buy. Gas prices rose 23 percent from the prior three months to average $2.893 per million British thermal units in New York during the third quarter.
“At those prices, we believe utilities should favor PRB and ILB coals over natural gas,” Thakkar wrote in an Oct. 18 note, referring to the Powder River Basin and the Illinois Basin in the U.S. Midwest.
The earnings were released before the start of regular trading in New York. Peabody fell 5.6 percent to $25.89 on Oct. 19. The shares have declined 22 percent this year.
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