Discounted Cash Flow Calculation for NYSE:BTU 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 try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.
NYSE:BTU DCF 1st Stage: Next 10 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
5/6, 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 United States of America.
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.
Is Peabody Energy Corporation (NYSE:BTU) A High Quality Stock To Own?
With that in mind, this article will work through how we can use Return On Equity (ROE) to better understand a business. … Our data shows Peabody Energy has a return on equity of 24% for the last year. … Return on Equity = Net Profit ÷ Shareholders' Equity
Should You Be Tempted To Buy Peabody Energy Corporation (NYSE:BTU) Because Of Its PE Ratio?
and want to start learning about core concepts of fundamental analysis on practical examples from today's market. … While this makes BTU appear like a great stock to buy, you might change your mind after I explain the assumptions behind the P/E ratio. … View our latest analysis for Peabody Energy
Is Peabody Energy Corporation (NYSE:BTU) As Strong As Its Balance Sheet Indicates?
Small-caps and large-caps are wildly popular among investors, however, mid-cap stocks, such as Peabody Energy Corporation (NYSE:BTU), with a market capitalization of US$5.56b, rarely draw their attention from the investing community. … Remember this is a very top-level look that focuses exclusively on financial health, so I recommend a deeper analysis. … See our latest analysis for Peabody Energy
What You Must Know About Peabody Energy Corporation's (NYSE:BTU) ROE
and looking to gauge the potential return on investment in Peabody Energy Corporation (NYSE:BTU). … Peabody Energy Corporation (NYSE:BTU) delivered an ROE of 16.48% over the past 12 months, which is an impressive feat relative to its industry average of 11.36% during the same period. … However, whether this above-industry ROE is actually impressive depends on if it can be maintained.
Peabody Energy Corporation engages in coal mining business. The company operates through Powder River Basin Mining, Midwestern U.S. Mining, Western U.S. Mining, Seaborne Metallurgical Mining, Seaborne Thermal Mining, and Corporate and Other segments. It is involved in mining, preparation, and sale of thermal coal primarily to electric utilities; mining bituminous and sub-bituminous coal deposits; and mining metallurgical coal, such as hard coking coal, semi-hard coking coal, semi-soft coking coal, and pulverized coal injection coal. The company supplies coal primarily to electricity generators, industrial facilities, and steel manufacturers. As of December 31, 2018, it owned interests in 23 coal mining operations located in the United States and Australia; and had approximately 4.9 billion tons of proven and probable coal reserves and approximately 500,000 acres of surface property through ownership and lease agreements. The company also engages in direct and brokered trading of coal and freight-related contracts, as well as provides transportation-related services, which involve financial derivative contracts and physical contracts. 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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