Discussions of relative performance always need to anchored with the question of "relative to what?". Peabody Energy (NYSE:BTU) has been one of the best-performing U.S. coal companies year-to-date and over the last year (edged out in both cases by Cloud Peak (NYSE:CLD), and handily beaten by quasi-coal company CONSOL Energy (NYSE:CNX)),
but the coal sector has continued to get thumped on weak met coal
pricing, long-term concerns about EPA regulations for thermal coal, and
rail shipments from the Powder River Basin.
I continue to believe
that Peabody Energy is the best-positioned U.S. coal company for the
long term. This year may see the company go FCF-negative, but Peabody
can generate positive free cash flow at coal prices well below the
breakeven levels for Alpha Natural (NYSE:ANR) or Arch Coal (NYSE:ACI).
I also like the company's asset base (Illinois and Powder River Basin
in the U.S., Australian met coal). While Alpha Natural has more upside
if met coal prices suddenly shoot up again, I think Peabody is the
better risk-adjusted pick overall.
Continue here:
Peabody Energy Still Waiting For Better Days
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