Covered
BTU · Peabody Energy Corporation
Updated ·
Against its published line
Above its line on the last close.
How to read this
The red mark is the published kill line — the price that would prove the thesis wrong. The dot is where the name closed on the last session; a dot left of the mark has closed through its line.
Distance is drawn on a square-root scale, so close calls get the room. Past 8% a row reads well clear, with a hollow dot to show the figure is off the drawn scale. Rows run tightest first.
Kill line
A daily close below $21.00, under the roughly $21.55 price MarketBeat cited on 30 July 2026 after the second-quarter miss. Reported Q3 2026 Centurion sales below Peabody's 0.5-million-ton guidance floor would also end the operating case.
Not a pickResearch coverage at low conviction. A medium-or-higher call would open a pick on the scoreboard.
Catalyst (8 days ago)
How picks are graded →The thesis
Peabody Energy's recovery case still rests on its Centurion metallurgical coal mine turning higher output into shipped sales and positive metallurgical earnings. The third-quarter 2026 report, expected around 29 October 2026, settles it. The shares closed at $22.44 on 21 October 2026, 42.8% below the 52-week high of $39.25 and below the $25.00 close of 8 October 2026.
Peabody guided on 29 July 2026 to 0.5–0.7 million tons of Centurion sales in the third quarter and 2.0–2.5 million tons for the year. The latest operating data point remains the September 2026 Jefferies presentation: August Centurion production of 222,000 tons and a 69% third-quarter-to-date yield, against 59% in the second quarter. Peabody announced its third-quarter results date on 20 October 2026, so the test is days away.
The narrative is maturing: Centurion has been well covered since the 11 August 2026 site visit and the 9 September 2026 presentation, and the new company news since the last note is a safety order, not an operating update. Sales inside the guided range plus a positive seaborne metallurgical result would support the case. Sales below 0.5 million tons would break it.
Bullish and bearish views on Peabody Energy Corporation
The bull case on Peabody Energy Corporation (BTU), in brief: Mine output has improved. The bear case: Metallurgical earnings are negative.
Bull case
- Mine output has improved. Peabody reported 222,000 tons of August 2026 Centurion production and a 69% third-quarter-to-date yield in its September presentation. The case needs that output to become at least 0.5 million tons of sales, the floor of the 29 July 2026 guidance.
- Thermal coal carried second-quarter earnings. Seaborne thermal generated $52.1 million of adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) on 3.0 million tons sold in the second quarter of 2026, per the 29 July 2026 release. That cushions weak metallurgical results while Centurion ramps.
- Liquidity covers the ramp. Peabody reported $526.3 million of cash and $959.1 million of total liquidity at 30 June 2026, and raised its revolver to $400 million in the second quarter.
- Analyst targets sit above the price. UBS's target is $26.50 (neutral, 4 August 2026), B. Riley's is $29 (neutral, 30 July 2026) and Benchmark's is $36 (Buy, 30 July 2026). Each is above the $22.44 close of 21 October 2026.
Bear case
- Metallurgical earnings are negative. The seaborne metallurgical segment lost $17.0 million of adjusted EBITDA on 2.5 million tons sold in the second quarter of 2026. A third-quarter loss despite sales within guidance would show that volume alone does not restore margins.
- Group earnings fell sharply. Second-quarter 2026 adjusted EBITDA was $24.0 million, against $93.3 million a year earlier, per the 29 July 2026 release. Management attributed the decline mainly to the slow Centurion ramp.
- A new safety order adds operating risk. Company news dated 16 October 2026 reported that Peabody Powder River Mining received a Mine Safety and Health Administration imminent danger order at the North Antelope Rochelle surface mine in Wyoming. Mining Weekly reported on 19 October 2026 that workers were evacuated from part of the mine over highwall material and that no one was hurt. It also reported the order was terminated the same day, per Peabody; the effect on third-quarter volume has not been quantified.
- Analysts cut targets after the miss. Benchmark, B. Riley and UBS each lowered targets between 30 July 2026 and 4 August 2026. No target changes dated October 2026 turned up in a search.
- Much of the volume is low-margin thermal coal. Peabody guides 82.0–88.0 million tons of Powder River Basin thermal coal for 2026, so Centurion carries a large share of earnings upside but a small share of tonnage.
- Debt has grown. Peabody issued $250 million of convertible notes due 2031 in the second quarter of 2026, and the residual 2028 converts remain outstanding.
Price setup
The shares closed at $22.44 on 21 October 2026, with a 14-day relative strength index (RSI) of 30.0, the conventional oversold threshold. The 52-week high is $39.25, and the three-month price change is -1.3% in adjusted daily closes. The shares closed at $25.44 on 25 September 2026 and $25.00 on 8 October 2026, so the price has fallen into the report.
The $24 level published in the 9 October 2026 note now sits above the last close. MarketBeat cited prices of $21.55 on 30 July 2026 and $22.42 on 4 August 2026, right after the second-quarter miss, so the current price is back near the post-miss range.
Crowding evidence is limited. Benzinga flagged the shares as overbought on RSI on 25 August 2026, and that reading has reversed to 30.0. The earnings report is days away. No insider-sale or share-issuance filings appear in the last 30 days.
Catalysts, next 30 days
- Report day: Any change to the 2.0–2.5 million ton full-year Centurion guidance, and any comment on the North Antelope Rochelle order.
Elapsed catalysts
- ~29 October 2026 (est.): Third-quarter 2026 results. Peabody announced the release date on 20 October 2026; last year's report followed its notice by nine days. Reported Centurion sales against the 0.5–0.7 million ton guidance and seaborne metallurgical adjusted EBITDA decide the case. (passed 8d ago)
What would change the view
The case breaks if reported third-quarter Centurion sales fall below Peabody's 0.5-million-ton guidance floor, or if the release cuts the 2.0–2.5 million ton full-year target. A negative seaborne metallurgical result despite sales inside guidance would also show that the ramp is not restoring margins. A third-quarter safety or production disruption at the Powder River Basin mines that changes the volume guidance would weaken the thermal cushion.
On price, a daily close below $21.00 would put the shares under the roughly $21.55 level MarketBeat cited on 30 July 2026 after the second-quarter miss.
What it trades with
Peabody's metallurgical results track seaborne steelmaking-coal prices and Chinese and Indian steel demand. Its thermal results track Asian seaborne thermal prices and US power-sector coal burn. Australian operations add exposure to the AUD/USD exchange rate and to Queensland wet-season shipping disruption between December and March. Other US-listed coal producers and the broader energy sector share the commodity exposure, but Centurion's ramp is specific to Peabody.
Notes
- Roughly half of guided 2026 volume is low-margin Powder River Basin thermal coal (82.0–88.0 million tons), so headline tonnage overstates earnings sensitivity to coal prices.
- Australian operations expose results to the AUD/USD exchange rate and to Queensland wet-season shipping disruption between December and March.
- Peabody issued $250 million of convertible notes due 2031 in Q2 2026; the residual 2028 converts remain outstanding.
- The quarterly dividend is $0.075 per share (declared 29 July 2026, paid 3 September 2026).
- Liquidity was $959.1 million at 30 June 2026 and the revolver was raised to $400 million in Q2 2026.