BTU

Peabody is a textbook commodity cyclical sitting at the bottom of its cycle. After peaking at $1.32B net income in FY2022, earnings have stair-stepped down every year — $816M (2023), $404M (2024), and now a -$42.5M net loss and -$80.1M operating loss in FY2025 on revenue of $3.86B (-8.9% YoY). Operating cash flow nearly halved to $334M and now sits below the $411M capex bill, so the company burned modest free cash this year while still paying $36.5M in dividends; cash fell 17.9% to $575M. The MD&A frames this as a global-demand story — seaborne thermal (NSW) and metallurgical (Queensland) coal sold into export markets where 'revenue from individual countries varies year by year based on electricity and steel demand,' i.e. earnings are hostage to coal prices the company doesn't control.

What keeps this a hold rather than a sell is the balance sheet and the price. Liabilities/equity is just 0.63x, equity is $3.54B against a $2.83B market cap — the stock trades at roughly 0.8x book and 0.7x sales — and the GAAP loss is shallow and largely a function of $385M of depreciation/depletion against a still-positive $334M operating cash flow. This is not a distressed balance sheet; it is a profitable-on-a-cash-basis business in a price trough. Management is acting like it agrees: through 2025 it repurchased 23.8M shares for $530.8M with $469.6M still authorized, and declared an additional $0.075 dividend in Feb 2026. The Wambo Underground closure (Sept 2025) shows active high-cost portfolio pruning.