Peabody Energy Corp.
) will release its second quarter 2014 financial results before the
market bell on Jul 22, 2014. In the prior quarter, this coal
operator reported a negative earnings surprise of 1800.0%. Peabody
currently has a Zacks Rank #4 (Sell). Let's see how things are
shaping up at Peabody prior to this announcement.
Factors to Consider This Quarter
Peabody is presently going through a rough phase as increasing
usage of natural gas and alternate energy continues to eat into
coal's share in power generation. Despite difficulties, Peabody's
presence in two of the fastest growing coal markets in the U.S. and
its exposure in Australia will help it to face, if not overcome,
The World Steel Association projects a 3.1% increase in global
steel usage in 2014. Renewed demand for metallurgical coal is thus
expected to provide some support to the beleaguered Peabody.
In the first quarter, Peabody's performance was adversely hit by
the lower realized prices of product sold due to a supply glut in
the global markets. Transportation also plays a vital role in
domestic coal sales. With continuing congestion in railroad
services, coal prices will continue to be under pressure as
deliveries are stalled. .
To add to the woes of this coal producer, the U.S. Environmental
Protection Agency (EPA) has lately proposed a Clean Power Plan, the
primary objective of which is to cut emissions from existing power
plants by 30% over the 2005 to 2030 time frame. If
implemented, the prospects of coal for the utility industry will be
delved a huge blow.
Our proven model conclusively shows that Peabody Energy is likely
to miss earnings this quarter. That is because a stock needs to
have both a positive
and a Zacks Rank #1, 2 or 3 for this to happen. This is not the
: This is because the Most Accurate estimate stands at
negative 29 cents while the Zacks Consensus Estimate is negative 27
cents, resulting in -7.41% ESP.
Zacks Rank #4 (Sell)
: Peabody's Zacks Rank #4 combined with a -7.41% ESP indicates that
the company is going to miss the earnings forecast this quarter. We
particularly caution against stocks with a Zacks Rank #4 and 5
going into the earnings season.
Other Stocks to Consider
Here are some companies tied to the coal industry worth considering
on the basis of our model, which shows that they have the right
combination of elements to post an earnings beat this quarter.
CONSOL Energy Inc.
) has an earnings ESP of +12.00% and carries a Zacks Rank #2 (Buy).
American Electric Power Company Inc.
) has an earnings ESP of +2.67% and carries a Zacks Rank #2 (Buy).
) has an earnings ESP of +2.99% and carries a Zacks Rank #3
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PEABODY ENERGY (BTU): Free Stock Analysis
AMER ELEC PWR (AEP): Free Stock Analysis Report
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SOUTHERN CO (SO): Free Stock Analysis Report
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