Peabody Energy Corporation (BTU): A Bull Case Theory 

We came across a bullish thesis on Peabody Energy Corporation on Valueinvestorsclub.com by mana12. In this article, we will summarize the bulls’ thesis on BTU. Peabody Energy Corporation’s share was trading at $35.26 as of January 30th. BTU’s trailing and forward P/E were 26.89 and 25.19 respectively according to Yahoo Finance.

Peabody Energy Corporation engages in coal mining business. BTU presents a compelling bullish investment case driven by a combination of undervalued core operations, emerging critical minerals optionality, and a cyclical rebound in coal demand tied to AI-driven power needs. At the core, BTU’s thermal and metallurgical coal business is materially mispriced. Management values the Centurion metallurgical coal project at approximately $1.5 billion, supported by recent peer transactions and prior third-party interest at similar levels.

Including Centurion’s full earnings power and normalized operations, the core business is expected to generate roughly $900 million of EBITDA by FY27, implying an equity value of approximately $30–35 per share. While uncertainty remains around potential liabilities related to the Anglo transaction, management believes this is not a material adverse change, and even a downside resolution would be manageable relative to the company’s earnings power.

Beyond coal, BTU offers significant upside through its exposure to critical minerals, a top priority for the U.S. Department of Energy amid efforts to reduce dependence on China-dominated supply chains. BTU has identified meaningful concentrations of heavy and light rare earth elements, as well as key critical minerals such as scandium, gallium, and germanium, within the clay overburden of its Powder River Basin mines.

Management has stated these concentrations are “equal if not better” than peers, with a structural scale advantage given BTU already operates the largest mine in the region. This positions BTU as a favored domestic supplier candidate, with potential value estimated at roughly $25 per share as partnerships and government support materialize.

Additionally, AI-driven electricity demand is reshaping the U.S. power landscape, benefiting coal. Coal generation is rising year-over-year, plant utilization is improving, and delays in gas-fired capacity have increased reliance on existing coal assets. With structurally higher natural gas prices and urgent “time-to-power” needs, Powder River Basin coal remains a cost-effective solution. Incremental volume and pricing upside could drive an additional ~$700 million of EBITDA, adding another ~$25 per share in value. Taken together, BTU offers multiple, independent upside catalysts with limited downside at current levels.

Previously, we covered a bullish thesis on Peabody Energy Corporation (BTU) by Hugo Navarro in January 2025, which highlighted the strategic acquisition of additional coal assets, positioning BTU to capture market share amid constrained global supply and potential metallurgical coal price recovery. BTU’s stock price has appreciated by approximately 87% since our coverage. Mana12 shares a similar perspective but emphasizes critical minerals optionality and AI-driven coal demand.

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Disclosure: None.