Peabody Energy Corporation (NYSE/BTU) shares plunged on Friday, June 26th, following an unfavorable ruling by the Supreme Court decision.
Because of new regulations on carbon emission rules by the Environmental Protection Agency, utilities have been shuttering some coal-fired plants. Today’s ruling by the Supreme Court deems those regulations are legal. Shares of Peabody and other coal miners were hammered after the announcement.
To make matters worse, credit rating agency Moody’s downgraded Peabody’s credit rating to “B3” from “B2,” reflecting lack of solvency due to the ongoing decline in the seaborne metallurgical coal markets. (Source: Moody’s, June 26, 2015.)
Shares of Peabody dropped by more than 7.3% to $2.13 on afternoon trading sessions. The shares of the coal miner have plunged nearly 70.4% year-to-date and 86.6% in the past year.
Frustrating news for the company seemed to be endless. In addition, the entire coal mining industry has been suffering because of higher production costs and lower coal prices in the past few years.
For investors, the latest Supreme Court’s decision will put even more pressure on the mining industry. Analysts will have to further cut their earnings estimate for Peabody and other coal miners as a result of this ruling.