Peabody secures multi-year coal supply contract

ST. LOUIS - Peabody (NYSE: BTU), a $1.46 billion market cap coal producer with $4.24 billion in trailing twelve-month revenue, has entered into a multi-year contract to supply Associated Electric Cooperative Inc. with seven to eight million tons of coal annually for at least seven years, the company announced today. The agreement reinforces the role of coal in meeting the rising electricity demands in the United States.

The coal will be sourced from Peabody’s North Antelope Rochelle Mine (NARM) in Wyoming’s Powder River Basin to fulfill the fuel requirements of Associated’s New Madrid Power Plant and Thomas Hill Energy Center in Missouri. NARM, recognized as North America’s largest coal mine and one of the world’s largest, sold 60 million tons of coal in 2024. According to InvestingPro analysis, Peabody maintains a strong financial position with a healthy current ratio of 2.15 and trades at an attractive P/E ratio of 3.94x, suggesting the stock is currently undervalued.

Peabody’s President and CEO Jim Grech highlighted the significance of coal in providing baseload electricity, particularly as the nation experiences increased power needs from sectors like data centers and artificial intelligence. The company has been supplying coal to Associated’s generating stations for over three decades. With $709.8 million in EBITDA and a 2.49% dividend yield, Peabody demonstrates solid operational performance. For deeper insights into Peabody’s financial health and growth prospects, investors can access comprehensive analysis through InvestingPro’s detailed research reports.

Peabody, a leading coal producer, emphasizes its commitment to sustainability as a core aspect of its operations and future strategy. This contract signifies the continuation of a longstanding partnership between Peabody and Associated Electric Cooperative Inc., aiming to meet the growing energy needs reliably and affordably.

This news is based on a press release statement from Peabody.

In other recent news, Peabody Energy has made several significant announcements impacting its financial and strategic outlook. The company reported an adjustment to the conversion rate for its 3.250% Convertible Senior Notes due 2028, which will increase the number of shares holders receive upon conversion. This adjustment aligns with the upcoming cash dividend payment and ensures the conversion feature’s value is maintained. Additionally, Peabody extended its receivables purchase agreement to 2028, enhancing its liquidity and financial flexibility.

Analysts have been active in assessing Peabody’s stock, with Jefferies maintaining a Buy rating and a price target of $18, while Benchmark reduced its target to $26 but also kept a Buy rating. These ratings reflect confidence in Peabody’s strategic decisions, despite the ongoing reassessment of its potential acquisition of Anglo American’s steelmaking coal division following an incident at Anglo’s Moranbah North mine. Peabody’s management has expressed interest in alternative financing options and remains optimistic about the long-term value of its assets, projecting substantial free cash flow over the next five years. Investors and market observers are closely monitoring these developments, as they could significantly influence Peabody’s future direction and financial health.

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