Peabody Energy surges on Q4 beat, early Centurion launch
Coal producer initiates dividend as flagship Australian mine begins production two months ahead of schedule
Peabody Energy shares climbed after the coal producer reported better-than-expected fourth quarter results and announced the startup of its flagship Centurion mine in Australia two months ahead of schedule, alongside a new dividend program.
The St. Louis-based company reported diluted earnings per share of $0.09 for the fourth quarter of 2025, beating analyst estimates of $0.08. Revenue reached $1.02 billion, narrowly surpassing the $1.02 billion consensus. For the full year, Peabody reported a loss of $0.43 per share on revenue of $3.86 billion.
The earnings beat came as Peabody's Centurion metallurgical coal project began longwall mining operations "this week," two months earlier than originally planned. The mine, located in Australia's Bowen Basin, is expected to produce 3.5 million tons of premium low vol hard coking coal in 2026, ramping up to 4.7 million tons annually by 2028. Centurion's net present value is assessed at $2.1 billion at current benchmark pricing, representing a more than 30% increase from late 2024 valuations.
Peabody declared a dividend of $0.075 per share, payable March 10 to shareholders of record February 23. The company ended the quarter with $575 million in cash and cash equivalents, maintaining what executives described as a strong balance sheet.
The early start at Centurion marks a significant milestone for Peabody's metallurgical coal strategy. Metallurgical coal demand is projected to expand at a compound annual growth rate of 3.4% to 7.7% through 2026, driven primarily by steel production growth in emerging economies. By contrast, global coal consumption overall is expected to decline 2.3% by 2026 compared to 2023 levels as renewable energy adoption accelerates in developed markets.
China and India are expected to account for more than 70% of global coal consumption in 2026, with India the only major producer projected to increase both supply and consumption. This geographic positioning favors Peabody's seaborne thermal coal strategy and focus on higher-quality metallurgical products.
Analysts maintain a broadly positive outlook on Peabody, with five analysts rating the stock a buy and one rating it a hold, according to recent data. The consensus price target stands at $34.47, slightly below the current trading level around $35.00. The stock has surged from its 52-week low of $9.50, though it remains below the year's high of $39.95 reached earlier in the period.
Peabody's Powder River Basin operations have also delivered stronger-than-expected results, with a significant portion of projected 2026 output already under contract. The company also benefits from a 2.5% production tax credit for domestic metallurgical coal at its Shoal Creek operation, effective January 1, 2026.
The Centurion expansion is part of Peabody's broader strategy to shift its portfolio toward premium metallurgical coal products, which command higher prices and are essential for steelmaking. The mine benefits from an expanded integrated mine plan of 140 million tons in the Goonyella Middle Seam, providing long-term production visibility.
Looking ahead, management said it expects metallurgical coal realizations to improve from approximately 70% to 80% of benchmark pricing, supported by the higher-quality product mix from Centurion and other operational improvements. The company's focus on seaborne markets positions it to benefit from Asian demand growth even as domestic coal consumption declines in the United States and other developed economies.