Peabody Energy (BTU) saw higher earnings forecasts from analysts after delivering a record second quarter. Current full-year estimates of $2.87 per share increased from $2.70 over the past 60 trading days.

Company Description

Peabody Energy is the world’s largest private-sector coal company, with 2007 sales of 238 million tons and $4.6 billion in revenues. The company’s coal products fuel approximately 10% of all U.S. electricity generation and 2% of worldwide electricity. Peabody serves global coal demand from electricity generators and steelmakers. The company is also growing to serve new global customers and emerging “Btu Conversion” markets.

Income

The company declared a dividend of 6 cents per share on July 25. The dividend was paid out on Aug. 29. BTU offers a dividend yield of 0.4%, which is in line with the industry average.

Growth

On July 23, Peabody Energy released its second-quarter report with record results. Income from continuing operations soared by 143% to a record $242.6 million on a year-over-year basis. The result translated into earnings per share of 89 cents, more than doubling the previous year’s 40 cents and topping the consensus estimate by 59%.

Second-quarter revenues also reached a record at $1.53 billion, compared to the year-prior $1.07 billion.

“Our investments in recent years have created an outstanding global platform. We have significant volumes of Australian met and thermal coal and the largest Powder River Basin and Illinois Basin position in the industry,” said Peabody Chairman and Chief Executive Officer Gregory H. Boyce. “The structural changes driving demand much higher than supply, across all coal markets, look to be very long-lived. We are just beginning to benefit from the repricing of legacy coal supply contracts at higher levels, which could drive significant earnings increases for many years to come.”

Peabody Energy’s return on equity (ROE) of 20% matches the industry average.

The company’s earnings per share are expected to grow by 35% over the next 3 – 5 years, which is well above the industry average of 10%.

Higher Estimates

BTU is forecasting earnings per share from continuing operations of $2.50 to $3.00 for the full year.

Wall Street’s current full-year estimates of $2.87 per share increased from $2.70 over the past 60 trading days.

Content Courtesy: Zacks Investment Research

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