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Attractive stocks have exceptional fundamentals. In the case of Peabody Energy Corporation (NYSE:BTU), there’s is a financially-healthy company with a an impressive track record of performance, trading at a discount. In the following section, I expand a bit more on these key aspects. If you’re interested in understanding beyond my broad commentary, read the full report on Peabody Energy here.
Undervalued with solid track record
In the past couple of years, BTU has ramped up its bottom line by over 100%, with its latest earnings level surpassing its average level over the last five years. Not only did BTU outperformed its past performance, its growth also surpassed the Oil and Gas industry expansion, which generated a 61% earnings growth. This paints a buoyant picture for the company. BTU’s ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This suggests prudent control over cash and cost by management, which is a key determinant of the company’s health. BTU’s has produced operating cash levels of 1.09x total debt over the past year, which implies that BTU’s management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
BTU’s share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. This mispricing gives investors the opportunity to buy into the stock at a cheap price compared to the value they will be receiving, should analysts’ consensus forecast growth be correct. Compared to the rest of the oil and gas industry, BTU is also trading below its peers, relative to earnings generated. This bolsters the proposition that BTU’s price is currently discounted.
For Peabody Energy, I’ve compiled three important aspects you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for BTU’s future growth? Take a look at our free research report of analyst consensus for BTU’s outlook.
- Dividend Income vs Capital Gains: Does BTU return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from BTU as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of BTU? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.