Why Peabody Energy Stock Soared as Much as 26.5% This Week
Shares of globally diversified coal miner Peabody Energy (NYSE: BTU) rose in dramatic fashion this week. By mid-day on July 21, the stock was sitting with a gain of roughly 25%, with a high-water mark of 26.5%. That's an impressive move driven largely by coal prices.
The quick takeaway here is that coal prices are on the rise, and thus, investors are upbeat on Peabody Energy. But there's a lot more to unpack than that. For example, Peabody has been struggling to support a heavily leveraged balance sheet, with a debt-to-equity ratio of roughly 1.7 times at the end of the first quarter. It isn't currently covering its trailing 12-month interest expenses, which helps explain why its bonds carry a below-investment grade credit rating. Higher coal prices will make it easier for Peabody to manage its leverage, and that is very good news.
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Source Fool.com