Investing

Earnings Previews: Caterpillar, Peabody Energy, Southwest Airlines

Peabody Energy

Between mid-October and mid-December, the stock price of Peabody Energy Corp. (NYSE: BTU) dropped by more than 54%. The shares have still managed to rack up a 12-month share price gain of about 507%.

Demand for coal soared last year, and coal prices have remained high, due in part to the Russian invasion of Ukraine and the war’s impact on global energy supplies. About 4.4% of Russia’s export revenue comes from coal, most of which goes to China, South Korea and Japan. European Union countries, which account for more than 20% of Russian coal’s export revenue, cut their imports of Russian coal by 10% a few weeks ago.

Only four brokerages cover the stock. Two of them have Buy ratings and the others rate the shares at Hold. At a share price of around $25.20, the upside potential based on a median price target of $27.50 is 9.1%. At the high price target of $32, the upside potential is 26.7%.

First-quarter revenue is forecast at $1.11 billion, down about 12% sequentially but up 70.6% year over year. Adjusted EPS are pegged at $2.19, down 36.6% sequentially and up from a year-ago loss per share of $0.56. For full fiscal 2022, consensus estimates call for EPS of $9.39, up 42.4%, on revenue of $1.76 billion, up 43.5%.

Peabody stock trades at 2.7 times expected 2022 earnings, 13.4 times estimated 2023 earnings of $2.55 and 71.6 times estimated 2024 earnings of $0.35 per share. The stock’s 52-week range is $3.44 to $33.29. The company does not pay a dividend. Total shareholder return for the past year was 471.5%.

Southwest Airlines

Shares of Southwest Airlines Co. (NYSE: LUV) have dropped more than 26% over the past 12 months, with the stock putting up a new 52-week low in early March. Of six major U.S. carriers, only JetBlue has performed worse in the past 12 months. The company recently announced a cut in June flights of nearly 7% (around 8,300). Southwest attributed that to adjusting to capacity. Pilot and other crew shortages are a serious problem for U.S. airlines, and even if demand rises, there is little airlines can do quickly to meet that demand.

Analysts are mostly bullish on the stock, however, with 15 of 22 giving the shares Buy or Strong Buy ratings and another six assigning a Hold rating. At a share price of around $45.20, the upside potential based on a median price target of $54.50 is 20.6%. At the high price target of $67, the upside potential is 48.2%.

First-quarter revenue is forecast at $4.67 billion, down 7.5% sequentially and up 118% year over year. Analysts expect Southwest to post a loss per share of $0.30, below EPS of $0.14 in the prior quarter, but better than the $1.72 loss per share a year ago. For the full 2022 fiscal year, analysts are expecting the company to report EPS of $1.13, compared to last year’s per-share loss of $2.15. Revenue is forecast to rise 38.6% to $21.89 billion.


Southwest stock trades at 39.7 times expected 2022 EPS, 14.0 times estimated 2023 earnings of $3.23 and 9.7 times estimated 2024 earnings of $4.63 per share. The stock’s 52-week range is $36.75 to $63.68, and Southwest does not pay a dividend. Total shareholder return over the past 12 months is negative 27.1%.

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