Breaking Down Peabody Energy Corporation (BTU) Financial Health: Key Insights for Investors

You're looking at Peabody Energy Corporation and trying to map the path forward, especially after the mixed signals from the third quarter of 2025. Honestly, the headline-a net loss of $70.1 million-looks rough, but you have to look past the one-time, $54 million acquisition termination charge that drove it. The underlying operational health is better: adjusted EBITDA still clocked in at nearly $100 million, and the company's liquidity remains robust at over $950 million, which is the real cushion against market volatility.

We need to focus on what management is controlling: the Powder River Basin (PRB) shipments are up, and the Centurion Mine development is ahead of schedule, setting the stage for a material increase in premium hard coking coal volumes by early 2026. Still, the analyst consensus suggests a median price target of $33.90, implying a solid 17.4% upside from recent trading, but that optimism hinges on executing these projects and managing the global thermal coal price environment. Let's break down the numbers and see if that upside is defintely achievable.

Revenue Analysis

You need to know where the money is coming from and, more importantly, where it's going. Peabody Energy Corporation (BTU) is fundamentally a coal producer, and its revenue streams are split between two primary product categories: thermal coal (for power generation) and metallurgical coal (for steel production). In the third quarter of 2025 (Q3 2025), the company reported total revenue of $1.01 billion, which was a 7.0% decline year-over-year (Y-o-Y).

The immediate takeaway is that lower sales volumes and pricing pressures across coal markets drove this revenue drop. Honestly, the global coal market is a volatile place right now, and the company's Last Twelve Months (LTM) revenue ending Q3 2025 stood at $3.96 billion, down 8.88% Y-o-Y. That's a significant headwind you need to factor into your valuation models.

Breakdown of Primary Revenue Sources (Q3 2025)

Peabody's revenue is segmented geographically and by coal type, giving you a clear picture of their operational strengths and weaknesses. The Powder River Basin (PRB) segment, which is their massive, low-cost U.S. thermal coal operation, remains the single largest contributor to the top line. But to be fair, the seaborne segments-both metallurgical and thermal-collectively represent a larger piece of the pie and are more exposed to global commodity price swings. Here's the quick math on the Q3 2025 segment contributions:

• Powder River Basin: $301.4 million (approx. 29.8% of total revenue)
• Seaborne Metallurgical: $258.9 million (approx. 25.6%)
• Seaborne Thermal: $242.7 million (approx. 24.0%)
• Other U.S. Thermal: $192 million (approx. 19.0%)

The diversification is key, but the reliance on thermal coal-which includes PRB and Other U.S. Thermal, totaling nearly half of Q3 revenue-still maps to the long-term energy transition risk. For more on the strategic direction, you should review the Mission Statement, Vision, & Core Values of Peabody Energy Corporation (BTU).

Segment Contribution and Near-Term Shifts

The Q3 2025 results show all segments experienced a revenue decline, which is a clear sign of market-wide pricing and volume pressures. What this estimate hides, however, is the underlying operational execution. Despite the headline revenue drop, the company reported higher shipments in the Powder River Basin and achieved its lowest metallurgical coal costs in recent years. This operational efficiency is defintely a bright spot, suggesting that while the market is tough, the company is managing its controllable costs well.

The metallurgical coal segment is where the near-term opportunity lies, even with current price weakness. The Centurion Mine project is on track for an accelerated startup in early 2026, and management expects this to significantly boost premium metallurgical coal shipments. This is a critical growth engine that could substantially shift the segment contribution mix toward higher-value met coal in the coming fiscal years. For now, here is the Q3 2025 segment revenue breakdown:

Profitability Metrics

You need a clear picture of how Peabody Energy Corporation (BTU) is actually making money, or more accurately, where it's losing it right now. The short answer is that while the core operation's gross margin is holding steady, one-time charges have hammered the near-term net profitability, a crucial distinction for your investment thesis.

For the third quarter of 2025, Peabody Energy Corporation reported $1.01 billion in revenue. While the overall Trailing Twelve Months (TTM) net profit margin is still technically positive at 0.17% as of the latest data, the recent quarterly performance shows the pressure.

• Gross Profit Margin: The Q3 2025 Gross Profit on sales was $115.2 million, translating to a 11.41% gross margin.
• Operating Profit Margin: The TTM Operating Margin as of mid-2025 was 3.81%, reflecting a significant drop from the 21.75% seen at the end of 2023.
• Net Profit Margin: The Q3 2025 Net Loss was $70.1 million, resulting in a negative net margin of -6.94%.

Here's the quick math on that net loss: it included a one-time $54 million charge related to a terminated acquisition. This is an important detail, because without that charge, the net loss would have been significantly smaller, showing the statutory net margin is not defintely representative of the underlying operating performance.

Trends and Operational Efficiency

The trend shows a recent dip in profitability, but with signs of operational stabilization. Peabody Energy Corporation's profitability ratios have been volatile, which is common in the cyclical coal industry. For example, the TTM Operating Margin plunged from over 21% in late 2023 to 3.81% by mid-2025, largely due to normalizing coal prices after the 2021-2022 spike.

Still, the operational efficiency story is better than the bottom line suggests. The gross margin actually ticked up slightly from 11.30% in Q2 2025 to 11.41% in Q3 2025. This suggests decent cost management, especially with the company benefiting from lower metallurgical coal costs and disciplined cost control across segments like the Powder River Basin (PRB) and seaborne thermal coal.

The company is also moving its Centurion Mine development forward, which is expected to be a long-life, lowest-cost met-coal operation, driving future operating leverage and free cash flow. This is a clear action to improve future margins. If you want to dive deeper into the company's long-term vision, check out the Mission Statement, Vision, & Core Values of Peabody Energy Corporation (BTU).

Industry Comparison

When you stack Peabody Energy Corporation against the broader mining sector, its current profitability lags. The average EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margin for the top 40 global mining companies (excluding gold-focused firms) was around 22% in 2024. Peabody Energy Corporation's Q3 2025 Adjusted EBITDA of $99.5 million suggests a much lower operating margin profile, though Adjusted EBITDA is not a direct Operating Margin equivalent.

The coal mining industry overall saw its revenue creep back down, including a 3.0% dip in 2025, so Peabody Energy Corporation is fighting a sector-wide headwind. The key takeaway is that Peabody Energy Corporation's margins are currently thin and highly exposed to market volatility, but management's focus on cost control and premium metallurgical coal production is the right strategic move to close the gap with more profitable peers.

Debt vs. Equity Structure

You're looking at Peabody Energy Corporation (BTU) and wondering how it funds its operations-is it a debt-fueled growth story or a fortress built on shareholder capital? The simple takeaway is that Peabody Energy Corporation's balance sheet is defintely strong, showing a clear preference for equity funding over debt, a significant shift from its past.

As of the latest 2025 data, the company's total debt sits around $407.6 million, which is a manageable figure when you stack it against their total shareholder equity of approximately $3.6 billion. This low leverage is a key point for any investor right now. Here's the quick math: the Debt-to-Equity (D/E) ratio is only about 0.11, or 11%.

Debt-to-Equity: A Clear Advantage

For context, a D/E ratio of 0.11 is remarkably low for a capital-intensive sector like coal mining. The median D/E ratio for the broader U.S. Coal Mining industry in 2024 was around 0.67 (or 67%). Peabody Energy Corporation is running with a fraction of the leverage of its peers, which means less risk from interest rate hikes or a downturn in commodity prices.

This low ratio means that for every dollar of shareholder equity, the company only has about $0.11 in debt. This is a massive improvement from five years ago, indicating a deliberate, conservative financial strategy following its restructuring. They're using internal cash flow and equity to fund the business, not borrowed money.

• Debt-to-Equity Ratio (2025): 0.11.
• Industry Median (Coal Mining): 0.67.
• Liquidity (Current Ratio): 1.99 to 2.21, showing strong short-term coverage.

The Debt Structure and Refinancing Moves

When we look closer at the debt, the majority is long-term. Peabody Energy Corporation's long-term debt was reported at around $331 million in Q1 2025. While total short-term liabilities are higher, at about $797.3 million, this figure includes all current obligations like accounts payable, not just short-term debt, and is well-covered by the company's current assets, as indicated by the high Current Ratio.

The company has been active in managing its existing financing, too. In February 2025, Peabody Energy Corporation extended its receivables purchase agreement, a key source of liquidity, pushing the facility termination date out to January 18, 2028. Still, the path hasn't been entirely smooth; in April 2025, the company delayed seeking a $500 million private debt issuance intended to help refinance a larger $2.1 billion bridge loan tied to its proposed acquisition of Anglo American's steelmaking coal business. This delay highlights the execution risk associated with large-scale acquisitions and the potential for debt financing to be impacted by market or operational issues.

The core message for you as an investor is this: Peabody Energy Corporation is currently a low-leverage company, which is a significant de-risking factor in the volatile energy market. Its challenge isn't solvency; it's efficiently financing its strategic growth moves, like the Anglo American deal, without compromising that strong balance sheet. You can dive deeper into who is betting on this low-leverage strategy in Exploring Peabody Energy Corporation (BTU) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

You're looking for a clear picture of Peabody Energy Corporation's (BTU) ability to meet its near-term obligations, and honestly, the balance sheet tells a story of fundamental strength, despite a recent net loss. The company's liquidity position, as of the third quarter of 2025, is defintely robust, anchored by a significant cash reserve and strong current ratios.

Peabody Energy Corporation's liquidity ratios are solid. The Current Ratio, which measures current assets against current liabilities, stands at a healthy 1.99 for the most recent quarter (MRQ). This means the company has nearly two dollars of short-term assets for every dollar of short-term debt. Even the Quick Ratio (or acid-test ratio), which excludes inventory, is a strong 1.14. Anything over 1.0 is generally a good sign of immediate financial health; this shows they can cover all current liabilities with just their most liquid assets-cash, equivalents, and receivables.

The trend in working capital (current assets minus current liabilities) remains positive, indicating a strong buffer. For context, in Q1 2025, the company reported approximately $965 million in working capital. This substantial cushion, plus cash on hand totaling $603.3 million and total liquidity exceeding $950 million as of Q3 2025, provides significant protection against short-term market volatility.

Here's the quick math on their cash flow statements and what it tells us about their operations:

• Operating Cash Flow (OCF): In Q3 2025, Peabody Energy Corporation generated $122 million in operating cash flow. This is cash generated directly from selling coal, and it shows the core business is still a cash-generating machine, even with a GAAP net loss of $70.1 million in the same quarter.
• Investing Cash Flow: Over the last twelve months (LTM), capital expenditures (CapEx) totaled $416.40 million. This high figure reflects the ongoing investment in the business, notably the Centurion mine development, which is on track for an accelerated longwall production startup in Q1 2026. The trend is clear: they are spending heavily to position themselves for future, higher-margin metallurgical coal production.
• Financing Cash Flow: The company continues to return capital to shareholders, declaring a quarterly dividend of $0.075 per share in Q3 2025. This signals management's confidence in the long-term cash generation of the business.

What this estimate hides is the strain of high capital spending. The Last Twelve Months (LTM) Free Cash Flow (OCF minus CapEx) was actually negative, at -$31.50 million. This is a crucial near-term risk. It means the cash generated from operations isn't quite covering the company's heavy investment in growth projects like Centurion. Still, the overall liquidity strength-that $950 million+ buffer-mitigates this, but it's a trend you need to monitor closely. If the Centurion ramp-up is delayed, the negative free cash flow period will be extended.

For a deeper dive into the company's strategic positioning and valuation, you should read our full analysis: Breaking Down Peabody Energy Corporation (BTU) Financial Health: Key Insights for Investors.

Valuation Analysis

You're looking at Peabody Energy Corporation (BTU) and asking the crucial question: Is this stock overvalued, undervalued, or fairly priced? Honestly, it's a mixed bag right now, which is common in a volatile commodity sector like coal. The key is to look past the noise and focus on the core valuation multiples and near-term risks.

The consensus among analysts is split, but generally leans toward a neutral-to-positive view. As of November 2025, the average 12-month price target is around $27.00, which suggests a limited upside or even a slight downside from the recent trading price near $29.00 to $30.00. The analyst ratings are mixed, with a blend of 'Buy,' 'Hold,' and a few 'Sell' recommendations, resulting in a consensus of either a 'Hold' or a low-end 'Buy.'

Here's the quick math on the key valuation metrics, using Trailing Twelve Months (TTM) data as of November 2025, which gives you a clear picture of its current earnings power and asset backing:

• Price-to-Book (P/B) Ratio: 1.01
• EV/EBITDA Ratio (Enterprise Value-to-EBITDA): 8.30

A P/B ratio of 1.01 is defintely a key signal. It means the market is valuing the company almost exactly at its book value (assets minus liabilities), suggesting the stock is trading close to its liquidation value. This often points to a potential value opportunity, but it also reflects market skepticism about future earnings growth or the long-term viability of coal. The EV/EBITDA of 8.30 is slightly below the industry median, which could indicate it's relatively undervalued compared to peers based on operational cash flow (EBITDA, or Earnings Before Interest, Taxes, Depreciation, and Amortization).

The Price-to-Earnings (P/E) ratio is a bit messy because of recent earnings volatility. While the TTM P/E is reported around 25.3, the company also posted a negative Earnings Per Share (EPS) of -$0.290 for the TTM ended September 2025, which technically makes the P/E ratio 'At Loss.' This is why you must look at forward-looking estimates; the estimated forward P/E for 2025 sits around 19.48, a number that's high for a cyclical commodity company and suggests investors are pricing in a significant rebound in earnings.

Over the last 12 months, the stock has been a wild ride. The price has risen approximately 4.58% to 8.74% from November 2024 to November 2025, but that masks extreme volatility. The 52-week high was $35.99 in October 2025, and the 52-week low was a mere $9.61 in April 2025. This massive range shows the stock is highly sensitive to commodity price swings and global energy demand forecasts. You need to be prepared for this volatility if you step in.

Peabody Energy Corporation also provides a modest dividend, which helps cushion the ride. The annual dividend per share is about $0.30, giving a current dividend yield of approximately 1.04%. The dividend payout ratio is estimated at a sustainable 11.49% based on this year's forward earnings estimates, but the TTM ratio is negative due to the recent loss, highlighting the need for consistent earnings recovery to secure that payout.

To be fair, the coal industry faces long-term structural headwinds, which is what keeps the valuation multiples suppressed despite strong near-term commodity prices. If you want to dig deeper into the company's long-term strategy, you can check out the Mission Statement, Vision, & Core Values of Peabody Energy Corporation (BTU).

Your action here is to weigh the low P/B and competitive EV/EBITDA against the high volatility and mixed analyst sentiment. This is a trade on commodity cycles, not a long-term growth story.

Risk Factors

You're looking at Peabody Energy Corporation (BTU) and seeing the upside from their strategic pivot to metallurgical coal, but you need to be a trend-aware realist about the near-term headwinds. The core takeaway is this: Peabody is navigating a volatile market with strong operational efficiency, but their financial results are currently being hit by a one-time charge and the relentless pressure of the energy transition.

The company reported a net loss of $70.1 million for the three months ended September 30, 2025, a sharp reversal from the $101.3 million net income in the prior-year quarter. This isn't just market pressure; it's a mix of external forces and specific strategic costs that materialized this year. Here's the quick math on the biggest hit: $54.0 million of that Q3 loss was due to Costs Related to Terminated Acquisition. That's a significant, non-recurring financial risk that already hit the balance sheet.

External & Regulatory Headwinds

The biggest long-term risk for a coal producer is the global shift toward renewables, or what we call 'transition risk.' Stricter environmental regulations and the accelerating global move toward cleaner energy sources are a constant threat to future coal demand and profitability. This is a sector-wide issue, not just a Peabody problem, but it requires constant vigilance.

• Regulatory Uncertainty: Legal disputes and ever-changing environmental regulations continue to threaten operational stability.
• Market Volatility: Fluctuations in seaborne thermal and metallurgical coal prices, driven by global supply and demand dynamics, directly impact revenue.
• Geopolitical Friction: Trade policies, like the 15% tariff on U.S. coal imports by China, create headwinds for segments like Shoal Creek, making exports less competitive in key Asian markets.

To be fair, the company's diversified portfolio across thermal and metallurgical coal helps cushion the blow from a downturn in any single product type.

Operational and Strategic Challenges

Peabody Energy Corporation is betting big on metallurgical (steelmaking) coal, which is a smart strategic pivot, but it comes with execution risk. The Centurion Mine development is a cornerstone of this strategy, and its success is crucial for future operating leverage.

The company's focus on operational efficiency is a key strength, with operating costs and expenses decreasing from $814.2 million to $770.2 million year-over-year in Q1 2025. Still, operational challenges and weather-related disruptions in Australia remain a persistent risk to production and shipment volumes.

Here's a snapshot of the execution risk and financial resilience:

The company's strategic reweighting towards metallurgical coal, including the development of the Centurion Mine and the agreement to acquire four premium steelmaking coal mines in Australia, is the main mitigation plan against the decline in U.S. thermal coal. They are defintely trying to get ahead of the curve. You can read more about their long-term focus in their Mission Statement, Vision, & Core Values of Peabody Energy Corporation (BTU).

For investors, the near-term action is to monitor the Centurion ramp-up and the continued cost discipline. If onboarding takes 14+ days, churn risk rises.

Growth Opportunities

You're looking at Peabody Energy Corporation (BTU) and wondering where the growth comes from in a transitioning energy market. The short answer is: it's a story of operational discipline and a profitable pivot to metallurgical coal, not massive revenue expansion in 2025.

The consensus for the 2025 fiscal year shows Peabody Energy Corporation is still navigating a challenging environment, with revenue projected to be around $3.84 billion. That's a modest forecast annual revenue growth rate of about 3.92%, which, to be fair, trails the US Thermal Coal industry average of 5.47%. But the real focus is on the bottom line turnaround.

The High-Margin Pivot: Metallurgical Coal

The most significant growth driver isn't just selling more tons; it's about selling the right tons. Peabody Energy Corporation is strategically shifting its mix toward higher-margin metallurgical (coking) coal, which is essential for steel production and less exposed to the long-term decline of thermal coal for power generation.

This strategic shift, coupled with aggressive cost control, is why analysts forecast earnings to surge by an impressive 80.44% per year. Here's the quick math: while the 2025 consensus EPS is still negative at around -$0.68, that massive surge rate shows the company is closing the gap fast, aiming for profitability within the next three years.

• Shift to higher-margin metallurgical coal.
• Operational improvements pushing costs below guidance.
• Focus on premium hard coking coal production.

Strategic Capital and Policy Tailwinds

The company is putting its money where its mouth is, projecting a 2025 capital expenditure of around $420 million. This investment is key to supporting growth and operational efficiency, not just maintenance. Plus, you can't ignore the policy tailwinds-favorable U.S. coal policies, including royalty rate cuts and tax credits for domestic metallurgical coal, are defintely lowering the cost base and enhancing long-term competitiveness, especially in the Powder River Basin and Shoal Creek segments.

This is a major structural advantage that helps boost expected net margins and free cash flow. You can dive deeper into the ownership structure and market sentiment in Exploring Peabody Energy Corporation (BTU) Investor Profile: Who's Buying and Why?

The Global Competitive Edge

Peabody Energy Corporation's biggest competitive advantage is its sheer scale and geographic diversification. It's not just a US company. Its operations span the United States and Australia, giving it a global footprint that allows it to serve major, high-demand markets like Japan, China, and Taiwan.

This gives them a balanced revenue stream across their Seaborne Thermal and Seaborne Metallurgical segments, which helps mitigate risks from fluctuations in any single regional market. They are a global player in a commodity market, and that global reach is hard to replicate.

What this estimate hides is the volatility of commodity prices. Coal prices can swing wildly, and while the company is positioned for growth, a sudden drop in seaborne coal prices would quickly challenge these bullish projections. Still, the underlying operational improvements are real, and they are the foundation for any long-term value creation.