10 Most Undervalued Small-Cap Stocks To Invest In

8. Peabody Energy Corporation (NYSE:BTU)

Market Cap: $1.97 billion

Forward P/E: 12.19

Number of Hedge Fund Holders: 25

Peabody Energy Corporation (NYSE:BTU) is a coal producer that provides essential products for producing reliable energy and steel. It owns interests in coal mining operations based in Australia and the US, along with interests in Middlemount Coal Pty Ltd. The company’s segments include Seaborne Thermal Mining, Seaborne Metallurgical Mining, Powder River Basin Mining, Other U.S. Thermal Mining, and Corporate and Other. Along with mining, the company provides coal marketing, brokerage, and transportation services. The company has been focusing on expanding metallurgical coal production, which is crucial in steel manufacturing.

Due to this transitional phase, Peabody Energy Corporation’s (NYSE:BTU) financial performance suffered in 2024. Revenue declined from $4.94 billion in 2023 to $4.24 billion, and net income dropped from $759.6 million to $370.9 million in 2024. However, these declines are temporary due to the capital-intensive nature of metallurgical coal production and a longer ramp-up period than thermal coal.

Apart from these short-term headwinds, the company’s expansion initiative is expected to help it attain higher margins in the long run. Its Centurion Mine in Queensland’s Bowen Basin is expected to produce 4.7 million tons annually. By 2025, Peabody expects metallurgical coal production to reach 8.5 million tons, with major contributions from Centurion and Shoal Creek. Peabody Energy Corporation’s (NYSE:BTU) acquisition of Tier 1 coal mines from Anglo American is anticipated to further bolster its industry position.