Peabody Energy (BTU)
Market Capitalization: $4.8 billion
Total Return Since 3/9/2009: -16%
Coal is one of the dirtiest forms of energy, and despite special interest groups that push for “clean coal” technology as a way to use this abundant commodity, there simply isn’t much Western demand for the stuff.
As a result, coal king Peabody Energy (BTU) has taken it on the chin as revenues have been challenged and the company struggles to remain profitable in this rather hostile environment.
It’s not just President Barack Obama’s stricter regulations and “war on coal.” There’s also increasing pressure to find cleaner alternatives to coal in China thanks to some serious pollution issues there caused by coal power plans, among other things. The strong dollar and generally weak commodity pricing also have held back sales and profits to boot.
There might a future for coal, just like there remains a future for tobacco companies despite their products’ obvious drawbacks. But given recent ills, it’s unlikely the pain will end anytime soon for Peabody as it figures out how to right-size amid the decline of coal.