Line a tray or baking sheet with waxed paper; set aside. In a bowl, stir together peanut butter and butter. Gradually add powdered sugar, stirring until combined. If necessary, knead with hands until smooth. Shape peanut butter mixture into 1-inch balls; place on the prepared tray. Set aside.
In a medium heavy saucepan, melt candy coating over low heat, stirring constantly until smooth. Remove from heat and cool for 5 minutes. Using a fork, dip balls one at a time into coating, allowing excess coating to drip off. Return to waxed paper; let stand until coating is set (about 10 minutes). If desired drizzle balls with any remaining coating. Store, tightly covered, in the refrigerator.