Peabody Energy offers asymmetric upside if Centurion ramps successfully, but weak Q2 execution and coal-cycle risks make this a high-volatility recovery investment.
Overview
Peabody Energy is a geographically diversified coal producer with 16 active mines across the United States and Australia, organized into Seaborne Thermal, Seaborne Metallurgical, Powder River Basin, and Other U.S. Thermal segments. It supplies regulated utilities and global steelmakers, combining contract-backed domestic cash flows with commodity-sensitive international exposure. **The investment case depends on converting Centurion into a durable, high-margin metallurgical platform** as U.S. thermal generation declines. Centurion began full-scale production in February 2026 and could average 4.7 million tons annually over 25 years, but its commissioning problems contributed to a weak Q2 2026. Revenue increased 12.7% year over year to $1,003.2 million, while adjusted EBITDA fell 74.3% to $24.0 million and diluted EPS was $(0.74). The shares trade at 3.0x forward EV/EBITDA, 0.77x sales, and 0.91x–0.96x book value. Liquidity reached $959.1 million after refinancing and surety improvements. The near-term catalysts are Centurion’s second-half ramp, cost normalization, and potential valuation re-rating; the principal counterweights are execution, litigation, coal-cycle, and regulatory risks.