Oct. 27, 2014, 3:10 PM
- Investors see that the worst may be over for the coal market after a series of output cuts around the world, according to Peabody Energy (BTU -3.3%) Chairman and CEO Greg Boyce, pointing out that coal pricing has been essentially flat for about nine months.
- "There’s going to be a long lag where you’ve got less supply than demand,” Boyce says, and "that’s going to have a strong, strong pull for the sector."
- The CEO says catalysts coal investors are anticipating include rising Chinese demand and an improvement in U.S. railroad capacity to deliver from mining regions such as Wyoming’s Powder River Basin, where BTU produces most of its thermal coal.
- ETF: KOL
Oct. 23, 2014, 5:29 PM
Oct. 20, 2014, 9:19 AM
- Peabody Energy (NYSE:BTU) +1.1% premarket after posting a lighter than expected Q3 loss, as it controlled costs at its mines in Australia and helped lessen the impact of lower coal prices.
- BTU says its Q3 U.S. mining revenues fell 2.7% to $1.02B due to lower volumes and reduced Midwestern revenues per ton, while revenue/ton increased slightly to $21.24; Australian revenues slipped 4.1% to $676M as higher volumes partly offset a 13% reduction in revenues/ton.
- Expects to post a FY 2014 EPS loss of ($1.38)-($1.48) vs. consensus estimate for a loss of ($1.46), and foresees sales of 245M-255M tons vs. 2013 sales of 251.7M tons; also forecasts FY 2014 adjusted EBITDA of $765M-$815M.
- Projects FY 2014 U.S. demand for its coal to rise by 15M tons above 2013 levels, and says 2014 production is fully priced and 2015 production is ~85% fully priced.
- Says costs in the U.S. are 1%-3% per ton lower, and expects revenue/ton to come in 2%-4% below 2013 levels, while Australian costs have dropped by a more than expected ~$70/ton.
Oct. 20, 2014, 8:02 AM
Oct. 19, 2014, 5:30 PM
Oct. 15, 2014, 3:34 PM
- Peabody Energy (BTU +1.2%) has held up a bit better than most other coal stocks lately, but that does not stop Imperial Capital from assigning an Underperform rating and $5 price target to the stock.
- While BTU enjoys a stellar reputation and strong management team, the firm sees its shares and senior notes remaining under pressure from rising leverage and instability in global coal markets.
- Like more distressed coal producers, BTU's troubles stem from the debt-financed acquisition of coking coal assets in 2011 when it issued $4B of debt to purchase Macarthur Coal, Imperial adds.
- Most coal names are enjoying a nice bounce today: ANR +9.3%, ACI +8.3%, WLT +8%, CNX +3.8%, CLD +0.1%, YZC -0.8%, WLB -3%.
Oct. 13, 2014, 12:56 PM
- Arch Coal (ACI -2.6%) turns sharply negative, losing all earlier gains from this morning's report that Q3 adjusted EBITDA should come in at $70M-$74M, easily above the $67M consensus.
- Citigroup’s Brian Yu writes that ACI’s liquidity progress likely is due to improved working capital management, but that “the EBITDA improvement is still not enough to cover reported interest expense that averages $95M per quarter.”
- FBR Capital is more upbeat, reiterating its Outperform rating and saying the balance sheet update is a positive given investor concerns surrounding ACI’s liquidity in recent months.
- Coal stocks are now mixed: BTU +1.5%, ANR -0.6%, WLT -1.3%, CNX +0.3%, CLD -0.5%, WLB -2.9%.
Oct. 13, 2014, 9:41 AM
- Arch Coal (ACI +4%) pops higher at the open after saying it expects to record Q3 adjusted EBITDA of $70M-$74M vs. analyst consensus estimate of ~$67M.
- ACI says it held $1.05B in cash and short-term investments as of Sept. 30, vs. ~$990M at June 30; available liquidity as of Sept. 30 totaled $1.3B.
- ACI, which reports its full quarterly results on Oct. 28, says it published today’s preliminary earnings because of “recent unprecedented market conditions.”
- Other coal names also open higher: BTU +4.1%, ANR +4.1%, WLT +3.3%, CNX +1.3%, CLD +0.8%, WLB +0.7%.
Oct. 9, 2014, 12:19 PM
- Teck Resources (TCK -7.2%) tumbles to five-year lows after China, the world’s top coal importer, said it will levy tariffs of 3%-6% on imports of coal as of Oct. 15.
- The sudden move reintroduces taxes China had scrapped, and is seen by analysts as an attempt by the government to help its ailing domestic coal production sector.
- TCK's sales of commodities directly into China accounted for more than 26% of overall revenue in 2013, or nearly C$2.5B; it is unclear what portion of TCK’s revenues from China were generated by coal sales, but coal represented 44% of overall revenue in 2013.
- Among other top coal names: ACI -11.7%, CLF -11.5%, BTU -9.2%, WLT -7.2%, ANR -6.4%, CLD -5.5%, CNX -4.8%.
- ETF: KOL
Oct. 8, 2014, 12:24 PM
- Morgan Stanley analysts are the latest to dump on coal stocks (NYSEARCA:KOL), as it lowers its price forecast for hard coking coal to $125/ton next year and says 2015 appears likely to bring a more gradual price recovery than previously expected.
- The firm downgrades Walter Energy (WLT -10.3%) to Equal Weight from Overweight with a $4 price target, down from $16, noting that WLT likely has sufficient liquidity through 2015 but citing the uncertain timing and magnitude of a price recovery as leaving an insufficient margin of safety.
- Peabody Energy (BTU -1.2%) is the firm's preferred play in coal because it is less liquidity constrained than other coal producers; BTU "offers multiple ways to win, with diversified met, domestic thermal and seaborne thermal exposure."
- Also: ACI -6.4%, CLF -5.6%, CLD -5.2%, ANR -3.4%, OXF -2.3%.
Sep. 29, 2014, 5:53 PM
- Investors should generally stay away from coal stocks such as Arch Coal (NYSE:ACI), Alpha Natural Resources (NYSE:ANR) and Peabody Energy (NYSE:BTU) unless they are very long-term investors, J.P. Morgan’s John Bridges writes.
- Given growing supplies of natural gas and if there's no chilly winter, gas prices could weaken further and create a better buying opportunity for the coal space, the analyst says; coal bulls seem to have been seeing tax loss selling as a better opportunity than hanging on, and deep value buyers are failing to see positive catalysts.
- Bridges sees ACI and ANR as the “terrible twos," as ACI has $4.2B of net debt carried by $470M of market cap while ANR is only half as leveraged; both companies have balance sheet liquidity and have pushed out debt maturities to give themselves time for the coal market to recover, but there's no catalyst on the horizon to provide a boost.
- ETF: KOL
Sep. 25, 2014, 3:40 PM
- Coal stocks take a pounding as the quarterly benchmark price for metallurgical coal drops to a six-year low, according to Doyle Trading, amid a global oversupply and a slowdown in Chinese demand (KOL -2%).
- Australian coal producers and Japanese steel mills agreed to a Q4 price of $119/metric ton, down $1 Q/Q, dashing hopes for a rebound in the steelmaking coal which has slumped 64% since reaching $330 in 2011.
- CLF -9.2%, WLB -6.6%, ANR -4.9%, ARLP -3.7%, WLT -3.5%, BTU -3%, ACI -2.9%, CLD -2%, YZC -1.9%, CNX -1.2%.
Sep. 23, 2014, 9:45 AM
- Peabody Energy (BTU +3.9%) opens higher after reporting higher expectations for Q3 EBITDA, now seeing a range of $190M-$210M, which BTU says reflects strong cost improvements and operating results.
- BTU says it is experiences higher than expected results from the western U.S., improved performance from Australian metallurgical coal mines and continued cost reductions across the platform.
- Also updates Q3 EPS targets to a loss of $0.63-$0.69 from prior expectations for a loss of $0.40-$0.53, primarily reflecting the effects of non-cash tax expense following the repeal of the Minerals Resource Rent Tax in Australia.
Sep. 22, 2014, 3:47 PM
- Cliffs Natural Resources (CLF -8.5%) plunges to 52-week lows as worries grow over the potential for an economic slowdown in China.
- Chinese steel production grew a mere 1% Y/Y in August, well off 2.6% YTD and 9%-10% growth recognized over the past few years; Wells Fargo's Sam Dubinsky views the data as negative for iron ore pricing, and thinks it means trouble for CLF, whose results could disappoint as the value of assets likely will diminish as pricing continues to fall.
- Also, a Bloomberg weekend report says coal demand in China may peak as soon as this year, which could further hurt coal miners such as CLF.
- Iron ore giants are lower: BHP -3.2%, RIO -2.7%, VALE -4.8%.
- Coal producers: ANR -9.7%, WLT -9.2%, ACI -7.7%, CLD -4.6%, BTU -4.4%, WLB -2.7%.
Sep. 18, 2014, 3:39 PM
- Peabody Energy (BTU -4.6%) bumps off big early losses after saying it expects higher revenues/ton from the Powder River Basin next year than 2014 realizations due to strong contracting strategies built on layering in sales at attractive price levels.
- In an update on coal fundamentals and BTU's positioning, CEO Greg Boyce cites a fundamental mismatch in early reporting regarding China's new coal quality policies relative to the emerging view of its likely beneficial effects on Australian high-quality coal exports.
- BTU shares had sunk to multi-year lows after Goldman Sachs downgraded shares to Sell.
Sep. 18, 2014, 11:26 AM
- More on Goldman Sachs' downgrade of Peabody Energy (BTU -5.3%): The firm thinks coal prices are not yet close to the bottom, and it sees metallurgical coal falling as low as $120/metric ton during Q4 - bad news for all coal miners, but especially so for BTU and Alpha Natural Resources (ANR -4.1%).
- Goldman says it is focusing on three themes into year-end 2014: Avoid met coal stocks including BTU and ANR, given their high leverage and low-to-negative free cash flow; own sum-of-the-parts winners, reiterating its Buy ratings on SunCoke (SXC +1.9%) and Consol Energy (CNX -2%); prefer stronger balance sheets including SXC and CNX over weaker ones such as BTU and ANR.
- ETF: KOL
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