Sumary of Why Peabody Energy Stock Soared as Much as 26.5% This Week:
- What happened Shares of globally diversified coal miner Peabody Energy (NYSE:BTU) rose in dramatic fashion this week.
- So what The quick takeaway here is that coal prices are on the rise, and thus, investors are upbeat on Peabody Energy.
- For example, Peabody has been struggling to support a heavily leveraged balance sheet, with a debt-to-equity ratio of roughly 1.7 times at the end of the first quarter.
- Higher coal prices will make it easier for Peabody to manage its leverage, and that is very good news.
- The broader energy sector is going through a major transition as the world looks to reduce the amount of carbon fuel it uses.
- Indeed, for years electric utilities have been building natural gas-fired plants to replace older, dirtier coal plants.
- And then there’s the massive build-out of solar and wind generation that has been taking place.
- In fact, this was part of the reason why Peabody Energy went through a bankruptcy in 2016/2017. That big-picture trend hasn’t changed.