In May, Platts reported that coal demand from
India and China was sagging, and that production
cuts by Indonesian thermal coal producers
would likely at best stabilize prices.We believe
that emerging markets still represent growth
opportunities over the longer term, but that
near-term growth may be limited. Platts also
notes however that coal shipments from Australia's
Newcastle port hit a 13-week high in
mid-May, although approximately 80%-85% of
the coal volumes were thermal coal, whereas
the majority of BTU's coal reserves in Australia
are metallurgical coal.
ä In May, BTU elected to shut down its Viking
surface coal mine in Indiana, as its reserves of
high-sulfur coal were dwindling. The mine produced
1.1 million short tons in 2013, or about
0.6% of total U.S. production in 2013. While
Powder River Basin coal production has
dropped about 10% between 2011 and 2013, this
area of western coal still generates nearly
three-quarters of total U.S. production and is
likely to remain a key catalyst for the company.
ä We see a loss per share of $0.99 in 2014, narrowing
to a loss per share of $0.04 in 2015.
ä We believe that BTU's operational breadth and
international exposure affords it some potential
growth opportunities overseas, although nearterm,
we have some concern over apparent
weak demand from India and China. Longer
term, we see BTU's direct exposure to international
coal demand as an avenue of growth not
afforded to BTU's competitors.We expect
some improvement in coal markets this year as
natural gas prices have risen and coal stockpiles
in the U.S. have fallen.
ä Risks to our recommendation and target price
include declines in commodity coal and natural
gas prices, lower productivity and production,
unfavorable inflation leading to higher production
costs, and higher coal market inventories.
ä Our 12-month target price of $16 values the
shares at an enterprise value to EBITDA multiple
of about 8.5X our 2015 EBITDA estimate,
about in li
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
TheStreet Ratings team rates GENERAL ELECTRIC CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate GENERAL ELECTRIC CO (GE) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, increase in stock price during the past year and expanding profit margins. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
◾GE's revenue growth has slightly outpaced the industry average of 1.1%. Since the same quarter one year prior, revenues slightly increased by 2.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
◾GENERAL ELECTRIC CO has improved earnings per share by 12.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, GENERAL ELECTRIC CO increased its bottom line by earning $1.47 versus $1.38 in the prior year. This year, the market expects an improvement in earnings ($1.67 versus $1.47).
◾The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Industrial Conglomerates industry average. The net income increased by 13.2% when compared to the same quarter one year prior, going from $3,133.00 million to $3,545.00 million.
◾The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
◾49.83% is the gross profit margin for GENERAL ELECTRIC CO which we consider to be strong. Regardless of GE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 9.87% trails the industry average.
Starting next year," writes Jack Hough in Barron's, "BofA (NYSE:BAC) investors will get a glimpse of two things they haven't seen in years: a fairly clean income statement and a decent dividend." Litigation costs are set to nail the bank again this quarter, but then will begin to quickly clear away, leaving investors to focus on the bank's operations. Earnings per share - an estimated $0.75 this year - could hit $2 in 2017, and the annual dividend ($0.20 now) could rise to $0.55.
•CEO Brian Moynihan notes core pretax profit in four of BofA's five units was $8.5B in Q2, up from $6.8B two years ago. Business #5 is mortgages, and that provided a $4.5B loss thanks to now rapidly fading legacy issues. Litigation costs make most of the headlines, but there's also non-litigation expenses like modifying some loans and foreclosing on others. These costs dropped to $1.4B last quarter from $2.3B a year earlier, and are expected to fall to $500M in 2015.
•Upgrading BofA to a Buy earlier this month, Goldman - looking past litigation and other one-time items - says the bank has had the largest reduction in earnings volatility of any of its peers in recent years and the stablest trading revenues since 2013. The beacon is Wells Fargo - earnings stability and a higher dividend has that stock trading at a premium 1.7x book value. BofA is at 0.8x, and as its steadier earnings begin to become clearer, that valuation discount should narrow.
•Bank of America is also underowned, says Goldman, noting its weighting in mutual funds relative to its weighting in the S&P 500 is the second lowest among 25 large financials (the lowest is Berkshire Hathaway).
NEW YORK (TheStreet) -- TheStreet Ratings team reiterates The Coca-Cola Co. (KO_) as a "buy" with a ratings score of A. Shares of Coca-Cola are up 0.60% to $42.04 in late morning trading on Friday.
I've been patient for three long years . But I confess that when I bought BTU I was trying catch a falling knife . One thing I learned was knives hurt.
Everything you say may be true . I don't know . I'm just tired of the rhetoric. And not just from Boyce . Over the last 2 years C and BAC and other analysts have upgraded or increased price targets to no avail. I'd like to see some transformative strategy . Has Boyce looked into converting into a MLP, like ARLP? I don't know . I suppose that , because I'm buying companies now that are in the process of changing operations in some form , I want that for this long time holding (I mean BTU) , I want action not words. Recently bought BAC and AA, both under long term strategy changes . By the way I own EEP , a MLP energy pipeline at $32, but also a company in the midst of long term asset change and COP at $68. Got my eyes on SPLS , MRO , FTI, SU and FB. 3 of the 5 have either under gone or are under going operational changes . The one thing you should take away from my BS is , that , for business , change is good when the alternative of not changing is worse. And conversely , if ain't broke , don't fix it. It may be just me , but BTU seems a wee bit broken.
Whoa there cowboy ! Mullaly was the COO of Boeing! Boeing we're talking about . It's not like making a terrestrial transportation vehicle where if it stops working , you get a tow truck. You can't do that with a plane . The man was a proven manufacturing genius. Boyce, you got to wonder what's going on inside that head . Obama ? You got my vote . But you can't just ride this into the ground . Not if people are relying on you .Not just stockholders , but the remaining thousands of employees are depending on this guy to urn this around.
is flexibility and the ability to adapt , 2 qualities Boyce seems to lack . Why would you keep hyping coal all around he world when the writing is on the wall . And why would you ignore gasification if it's a viable option and essentially your only option, with the exception of diversifying . Boyce more now than ever appears to be old hard line coal management inflexible in his thinking and approach . A manager has an obstacle . What does he do ? He works around it . But not Boyce . He goes around and pounds the table saying coal is clean and the cheapest form of electric power generation (which may or may not be true , but that's not the point). It doesn't matter what he thinks . It matters what everyone else involved in power generation thinks and they think that coal pollutes . The question remains then , when will Boyce get religion and change his perspective and thus his approach? I'm suspecting never , as long as BTU can pay his salary , he will ride this into oblivion . And here's another catch to this . We actually need him . Why ? Who else are you going to get to bail water from this Titanic ? No one with any sense would take the job . So it's really important that Boyce make an effort to change direction , because there's probably no one else .
Okay , here I go . Boyce has been promising a turn around from India and China for 2 years . His insistence that the industry will somehow grow out of this downturn is becoming insincere rhetoric. His refusal to diversify or look into gasification which just goes to show that he is an old coal manager and ill equipped for the changes required for coal's future . I don't know about India , but the Chinese are investing heavily in wind, solar , hydroelectric, and natgas , while they try to reduce their dependence on coal because of the extreme pollution they are experiencing in major urban areas. In ten years , China may still be dependent on coal but it will be to a much lesser extent, and coal volume may well stay the same over 10 tears , but power generation expansion will come from other sources . They may be cheap , but they are not stupid . How long do you think the Chinese population is going to put up with the worst air pollution in the world. So , I'm not putting stock in anything Boyce says about China and India , because it's all speculation and he has no idea what they or anyone else will do in 2 years or 10 years . He's digging us and himself a hole with his coal only strategy and as far as I can tell , his only option after he destroys BTU , is to work for a tobacco company where he can swear that cigarettes are good for you .
Structural Changes In The Coal Industry: Time To Pay Attention
Sep. 18, 2014 9:28 AM ET | 33 comments | About: Peabody Energy Corporation (BTU)
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...)
•Peabody Energy CEO sticks with his “coal is here to stay” mantra.
•China to ban dirty coal imports.
•Energy security raised as an issue favoring development of renewables versus fossil fuel imports.
•Australian Superannuation funds exit thermal coal investment.
•Investors in the coal industry might reconsider the pace of change and what it means for their investment strategies.
A few weeks back I wrote about why I thought that the CEO of Peabody Energy (NYSE: BTU) was ignoring several structural changes that are starting to happen in the coal industry. Change was not expected immediately, but there were several reasons pointing to coal being in long term decline as an energy source.
This article was sent to 8,752 people who get email alerts on BTU.
A lot can happen in a month. Several significant things have happened recently that lead me to think that the change will happen rapidly.
Last week Greg Boyce CEO of Peabody Energy reaffirmed his optimism about the coal industry and when asked he indicated that Peabody Energy is a coal company and had no plans to diversify (even to gas). This is in contrast with the actions of the large European fossil fuels companies. A straw in the wind is that this week major government owned Indian coal company Neyveli Lignite Corp made an investment in 80MW of solar and wind projects. Strong leadership is about weathering the short term turbulence, but it is also about recognizing trends and adapting to them. Investors need to consider whether the current strategy by Peabody Energy to "crash through or crash" might mean that they will crash.
Goldman Sachs analyst Neil Mehta and team don’t think coal prices are close to bottom yet. They believe met coal could fall to $120 a metric ton during the fourth quarter of 2014, while thermal coal prices should fall as well. That’s bad news for all coal miners–Consol Energy, SunCoke, Peabody and Alpha Natural Resources all had their estimates reduced–but especially so for Peabody Energy and Alpha Natural. Mehta explains:
We downgrade Peabody Energy (BTU) to Sell from Neutral with 6% downside to our new 6-month, $13 EV/EBITDA-based target (previously $15). Key drivers of our negative view include: (1) a challenging outlook for US thermal coal prices, (2) low margins in Australia due to weak expected met pricing, (3) higher leverage levels and (4) valuation, with the stock discounting long-term met prices of $165/MT, above our 2015/2016 forecast of $140-$147/MT
but here it is.
Peabody Energy Provides Update On Global Coal Fundamentals
1 comment | Thu September 18, 2014 2:40 PM|PR Newswire | About: BTU
ST. LOUIS, Sept. 18, 2014 /PRNewswire/ -- Peabody Energy (BTU) today provided an update on coal fundamentals and Peabody's positioning given recent global and domestic industry events.
"We believe there is 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," said Peabody Energy Chairman and Chief Executive Gregory H. Boyce. "In addition, global announcements of metallurgical coal supply reductions continue to build, and we have seen a sharp increase in Indian thermal coal imports in recent months. And in the United States, Peabody is encouraged by recent Southern Powder River Basin coal supply agreements that are being signed well above those of published indices
In a report published Thursday, Credit Suisse analyst John Edwards reiterated an Outperform rating on Enbridge Energy Partners, L.P. (NYSE: EEP), and raised the price target from $39.00 to $42.00.
My thoughts are that we are going to see consolidation in the industry , and by consolidation I mean specifically noncash mergers . The smaller players with the poorest assets will fade into obscurity , but eventually BTU will merge with a coal company with similar assets in order to have more influence on world supply . It's the only seemingly solution to the demise of the industry ,especially now , when energy prices have been falling , putting even more pressure on the coal industry to compete. Other than this solution, BTU 's other option is to diversify into another business . Hopefully Mr. Boyce isn't stubborn enough to consider this last option as his first choice , since it has been proven successful with CNX. But without a clear change in direction , stockholders like myself are screwed.
Good post ! It's not your fault it cost more to bring it out of the ground than the amount you can sell it for . Who is the doof of a senator who wants to suspend coal leases? hey Senator , if you want coal companies to buy leases from the gov't , then lower the cost of the leases , Sherlock. even if it's for $1 a year per lease you would help keep the industry alive . Why keep it alive ? Because if we are going to get to clean coal some day we need an industry to apply it to . Who's going to spend the money to develop clean coal if there's no coal being used?
HOUSTON, TX--(Marketwired - Sep 17, 2014) - Enbridge Energy Partners L.P. (NYSE: EEP) ("EEP" or the "Partnership") has received a proposal initiated by Enbridge Inc. (NYSE: ENB) ("ENB") through Enbridge Energy Company, Inc., EEP's general partner ("Enbridge"), under which Enbridge would drop down its 66.7 percent interest in the U.S. segment of the Alberta Clipper Pipeline to EEP for aggregate consideration of approximately $900 million.
Citigroup Inc. restated their buy rating on shares of Peabody Energy (NYSE:BTU) in a report issued on Thursday. They currently have a $20.00 target price on the stock, down from their previous target price of $21.00