Discounted Cash Flow Calculation for DB:PBE using 2 Stage Free Cash Flow to Equity Model
The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value using the 2 stage method. We use
analyst's estimates of cash flows going forward 5 years for the 1st stage, the 2nd stage assumes the company grows at a stable rate into perpetuity.
DB:PBE DCF 1st Stage: Next 5 year cash flow forecast
Amount off the current price
is available for.
Share price is
vs Future cash flow value of
Current Discount Checks
to be considered undervalued it must be available for at least 20% below the
current price. Less than 40% is even better.
Peabody Energy's share price is below the future cash flow value, and at a moderate discount (> 20%).
Peabody Energy's share price is below the future cash flow value, and at a substantial discount (> 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
is considered below, and whether this is a fair price.
Price based on past earnings
Peabody Energy's earnings available for a low price, and how does
this compare to other companies in the same industry?
Peabody Energy's earnings are expected to decrease over the next 1-3 years, this is not considered high growth.
Peabody Energy's revenue is expected to decrease over the next 1-3 years, this is not considered high growth.
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
Peabody Energy's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
Oil and Gas
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
has a total score of
4/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Mr. Glenn L. Kellow is President and Chief Executive Officer of Peabody Energy Corporation (“Peabody”) since May 2015. Mr. Kellow has been a Director of Peabody Energy Corporation since January 2015. Mr. Kellow has extensive experience in the global resource industry. Over a 28-year career with BHP Billiton, he held multiple leadership posts on three continents. He served as President of the multinational aluminum and nickel business with operations in South Africa, Australia, Mozambique and Colombia. Mr. Kellow was Chief Operating Officer of Peabody Energy Corporation since August 2013. From 1985 to 2013, Mr. Kellow served in a number of roles with BHP Ltd., including senior appointments as President of Aluminum and Nickel from 2012 to 2013, President of Stainless Steel Materials from 2010 to 2012, President and Chief Operating Officer of New Mexico Coal from 2007 to 2010 and Chief Financial Officer of Base Metals from 2003 to 2007. Mr. Kellow has held a number of executive, operating and financial positions in the coal, copper, base metals, steel and petroleum sectors in the United States, Australia and Chile. Mr. Kellow serves as Vice Chairman of the World Coal Association and the International Energy Agency’s Coal Industry Advisory Board. He is also a Director of the U.S. National Mining Association. Mr. Kellow is the former Chairman of Worsley Alumina in Australia, Chairman of Mozal in Mozambique and Chairman of the global Nickel Institute. In addition, he was a member of the advisory board of the Energy and Mining Institute of the University of Western Australia. Mr. Kellow holds a master’s degree in business administration and a bachelor’s degree in commerce from the University of Newcastle in Australia. He completed the advanced management program of the Wharton Business School and is a Fellow of CPA Australia. Mr. Kellow was awarded an Honorary Doctorate in Science from South Dakota School of Mines & Technology and the Alumni Award for International Leadership from the University of Newcastle.
Glenn's compensation has increased by more than 20% in the past year.
Glenn's remuneration is higher than average for companies of similar size in Germany.
Management Team Tenure
Average tenure and age of the
management team in years:
The tenure for the Peabody Energy management team is about average.
Executive VP of Government Affairs
Executive VP of Corporate Services & Chief Commercial Officer
President of Americas
Chief Information Officer & Senior VP
SVP, Global Investor and Corporate Relations
Vice President of Tax Planning & Compliance
Group Executive of Marketing and Trading
Senior Vice President of Corporate Development
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The average tenure for the Peabody Energy board of directors is less than 3 years, this suggests a new board.
Peabody Energy Corporation engages in coal mining business. The company operates through six segments: Powder River Basin Mining, Midwestern U.S. Mining, Western U.S. Mining, Australian Metallurgical Mining, Australian Thermal Mining, and Trading and Brokerage. It is involved in mining, preparation, and sale of thermal coal primarily to electric utilities; and metallurgical coal that include hard coking coal, semi-hard coking coal, semi-soft coking coal, and low-volatile pulverized coal injection for industrial customers. The company supplies coal primarily to electricity generators, industrial facilities, and steel manufacturers. It owns interests in 23 coal mining operations located in the United States and Australia. The company also engages in direct and brokered trading of coal and freight-related contracts, as well as provides transportation-related services, which involves financial derivative contracts and physical contracts. As of December 31, 2017, it had 5.2 billion tons of proven and probable coal reserves and approximately 600,000 acres of surface property through ownership and lease agreements. Peabody Energy Corporation was founded in 1883 and is headquartered in St. Louis, Missouri. On April 13, 2016, Peabody Energy Corporation and its subsidiaries filed a voluntary petition for reorganization under Chapter 11 in the United States Bankruptcy Court for the Eastern District of Missouri.
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