Peabody Energy Again Bucks Short Interest Trend In Coal (BTU, JRCC, YZC)
Rising short interest in James River Coal (NASDAQ: JRCC), Peabody Energy (NYSE: BTU) and Yanzhou Coal Mining (NYSE: YZC) bucked the trend among leading coal-related stocks between the September 13 and September 30 settlement dates.
Short sellers shied away from Alliance Resource Partners (NASDAQ: ARLP), Alliance Holdings (NASDAQ: AHGP), Alpha Natural Resources (NYSE: ANR), Arch Coal (NYSE: ACI), Cloud Peak Energy (NYSE: CLD), CONSOL Energy (NYSE: CNX), Rhino Resource Partners (NYSE: RNO), Walter Energy (NYSE: WLT) and Westmoreland Coal (NASDAQ: WLB).
Note that short sellers fled SunCoke Energy (NYSE: SXC) during the period, as the number of shares sold short dwindled more than 38 percent during the period.
Below we take a quick look at how James River Coal, Peabody Energy and Yanzhou Coal Mining have fared and what analysts expect from them.
James River Coal
This Richmond, Virginia-based small cap company saw short interest grow about two percent in the latter weeks of September to more than 8.01 million shares. That was more than 22 percent of the float. It would take about nine days to close out all of the short positions.
In September, James River said it would cut production and lay off workers due to weak demand. The miner of thermal and metallurgical coal has a market capitalization of less than $69 million. Note that both its operating margin and its return on equity are in negative territory.
The consensus recommendation of the analysts surveyed by Thomson/First Call is to hold shares, and it has been for at least three months. The analysts' mean price target indicates that they feel shares could rise about 18 percent from the current share price. But shares traded higher than that about a month ago.
Shares have traded mostly between $1.75 and $2.25 since June. The share price is down more than 44 percent since the beginning of the year. The stock has outperformed competitors Alpha Natural Resources and Arch Coal over the past six months, but it has narrowly underperformed the S&P 500.
This St. Louis-based coal miner saw short interest rise more than seven percent to around 18.51 million shares. That was about seven percent of Peabody's float, and it came on top of a 14 percent increase in the number of shares short in the previous period. The days to cover rose to about four.
During the period, Peabody warned that a Chinese ban on coal-fired plants could have an impact on its Australian operations. The company has a market cap of more than $4 billion and offers a dividend yield near 2.0 percent. Note that its long-term EPS growth forecast is less than one percent and its return on equity is in the red.
Yet 15 of the 26 analysts polled recommend buying shares, six of them rating the stock at Strong Buy. The analysts' mean price target suggests more than 25 percent potential upside relative to the current share price. That target is less than the 52-week high from last November, though.
The share price has retreated more than nine percent in the past month. It is down more than 34 percent since the beginning of the year. Peabody Energy also has outperformed Arch Coal over the past six months, but it has underperformed competitor CONSOL Energy.
Yanzhou Coal Mining
The number of shares sold short in this Chinese miner and processor of coking and thermal coal increased more than 17 percent in the final weeks of the month to about 1.69 million shares. It would take about five days to close out all of the short positions.
This Zoucheng-based company has grown its top line each year since 2009. Yanzhou Coal has a market cap of more than $4 billion and a dividend yield near 5.3 percent. The long-term EPS growth forecast is only about five percent, but the return on equity is more than 18 percent.
Only one analyst was surveyed, and that analyst recommends selling shares. Not surprisingly, the current share price is much higher than the one analyst's price target.
Though it has retreated about five percent in the past two weeks, the share price has risen more than 38 percent since hitting a multiyear low back in July. Still, Yanzhou Coal has underperformed peers Alliance Holdings and SunCoke Energy, as well as the broader markets, over the past six months.
At the time of this writing, the author had no position in the mentioned equities.
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