Peabody Energy (BTU): Profit Forecast Surge Reinforces Investor Focus on Turnaround and Deep Share Price Discount

Peabody Energy (BTU) is still unprofitable, but the company has trimmed its losses by an average of 41.4% per year over the past five years. Revenue is projected to grow at 9.5% per year, trailing the broader US market’s 10.3% annual pace. Earnings are forecast to surge 80.44% per year, with expectations of reaching profitability within three years. With key growth drivers on the horizon and a current share price of $27.42 well below the estimated fair value of $80.29, investors will be watching to see if strong profit growth expectations are realized as the company transitions toward profitability.

See our full analysis for Peabody Energy.

Now, let's look at how these latest numbers measure up against the stories and perspectives shaping Peabody Energy’s outlook. Some might be confirmed, while others could face new questions.

See what the community is saying about Peabody Energy

Margins Show Signs of Resilience

• Analysts expect Peabody’s profit margins to climb from 3.5% to 9.6% over the next three years, indicating higher operating efficiency despite historical lack of consistent profits.
• Consensus narrative highlights several tailwinds reinforcing this view:
  • Favorable U.S. coal policies, such as royalty rate cuts and tax credits, are cutting costs and supporting longer-term margin expansion, especially in core assets.
  • Operational improvements are expected to push costs per ton below guidance. Combined with higher asset utilization, this sets the stage for outsized gains in future margins according to analysts' consensus view.

Cost Discipline Powers Cash Flow

• Peabody’s ongoing cost reductions have averaged a 41.4% decrease in annual losses over the past five years, a trend matched by company-wide investments in operational efficiency and asset optimization.
• Consensus narrative notes that:
  • Streamlined permitting, leaner assets, and ramp-up in premium hard coking coal production are all intended to drive stronger free cash flow and improve overall liquidity.
  • These efforts provide flexibility for capital returns through dividends and buybacks. There is an expectation of steady EPS growth into 2028 as ongoing cost control supports robust EBITDA and financial resilience.

DCF Fair Value Implies Deep Discount

• With a current share price of $27.42 and a DCF fair value estimate of $80.30, Peabody trades at just over one-third of its modeled intrinsic worth, creating a notable value gap for investors focused on long-term upside.
• While consensus narrative sees the price-to-sales ratio at 0.8x (well below peers at 6x and the industry at 1.5x) as a sign of undervaluation:
  • The same sources stress that Peabody’s slower revenue growth and historical lack of profits demand a careful view. That discount might represent both opportunity and a caution signal.
  • Consensus holds that unless Peabody’s profit acceleration and policy tailwinds materialize, the discount may persist.
• For a balanced analyst perspective on how these numbers tie into Peabody’s wider narrative, track the arguments in the full story here. 📊 Read the full Peabody Energy Consensus Narrative.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Peabody Energy on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

Think the data tells another story? In just a few minutes, you can craft and share your own take, adding your unique perspective. Do it your way

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Peabody Energy.

See What Else Is Out There

While Peabody Energy’s profit growth outlook is promising, its historical lack of consistent profits and modest revenue momentum signal risks for those seeking steadier performers.

If you want to focus on companies that consistently deliver healthy growth and avoid the volatility seen here, check out stable growth stocks screener (2099 results) and discover those with proven reliability.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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