In a large heavy saucepan, combine the sugar, corn syrup and water. Cook and stir over low heat until sugar is dissolved; bring to a full rolling boil. Boil, stirring constantly, until a candy thermometer reads 290° (soft-crack stage).
Meanwhile, place melted peanut butter in a large greased heat- proof bowl. Pour hot syrup over peanut butter; stir quickly until blended. Pour onto a well-buttered baking sheet; cover with a piece of buttered waxed paper. Roll mixture into a 14x12-in. rectangle. While warm, cut into 1-1/2x1-in. bars using a buttered pizza cutter or knife. Cool completely.
Melt candy coating; dip bars and place on waxed paper to harden.
Editor's Note: The accuracy of your candy thermometer is very important. Milk chocolate confectionery coating is found in the baking section of most grocery stores. it is sometimes called candy coating and is often sold in bulk packages of 1 to 1-1/2 pounds.