Peabody Energy Corp. (BTU) has seen analysts raise earnings estimates over the past few months with a slight increase occurring in just the past week. The company is scheduled to release results for the second quarter on July 23. Peabody posted first-quarter results in late April. Quarterly revenues increased 15% to a record $1.28 billion on a year-over-year basis. Income from continuing operations of 26 cents per share soared past the consensus estimate by 44%.

Company Description

Peabody Energy is the world’s largest private-sector coal company. Its coal products fuel approximately 10 percent of all U.S. electricity generation and 2 percent of worldwide electricity.

Last year Peabody shipped 238 million tons of coal and racked up $4.6 billion in revenues. The company has 340 electricity generating and industrial customers in nearly 40 states and 19 countries.

Look for Earnings in a Couple Weeks

The coal company is scheduled to release results for the second quarter on July 23.

Income

Peabody declared a regular quarterly dividend of six cents per share in late April, which was paid out in May 29. The dividend translates into a current yield that matches the industry average at 0.3%, which matches the industry average.

Growth

A couple days before the dividend declaration, the company posted first-quarter results. Quarterly revenues increased 15% to a record $1.28 billion on a year-over-year basis. Income from continuing operations of 26 cents per share soared past the consensus estimate by 44%.

“Peabody’s strategy to expand our global platform and target high-growth, high-demand markets is delivering significantly improved performance based on very strong coal markets and recent international price settlements,” said Peabody Chairman and Chief Executive Officer Gregory H. Boyce. “We believe that the outstanding global fundamentals for coal are resulting from structural changes in the supply-demand balance. Growing economies are being fueled by coal and world coal expansion cannot keep pace with demand.”

The company’s return on equity (ROE) of 16% signals growth and is higher than the industry average of 15%.

Growth should continue to be the theme for BTU as its earnings per share are expected to grow by 20%, in line with the industry average.

Higher Estimates

Peabody increased its full-year 2008 targets, pegging income from continuing operations at $2.20 to $3.00 per share.

Wall Street lifted earnings forecasts to be in line with the company’s outlook and has been increasing the estimates further since then.

Analysts upped full-year 2008 estimates to $2.67 per share from last week’s $2.65 and the two months-ago level of $2.57.

Content Courtesy: Zacks Investment Research

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