Rating Change #2
Southwestern Energy Company (SWN) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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Highlights from the ratings report include:
- Net operating cash flow has increased to $444.66 million or 12.15% when compared to the same quarter last year. In addition, SOUTHWESTERN ENERGY CO has also vastly surpassed the industry average cash flow growth rate of -52.08%.
- The gross profit margin for SOUTHWESTERN ENERGY CO is rather high; currently it is at 57.80%. Regardless of SWN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SWN's net profit margin of 16.40% compares favorably to the industry average.
- SWN, with its decline in revenue, slightly underperformed the industry average of 6.2%. Since the same quarter one year prior, revenues slightly dropped by 2.9%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- SOUTHWESTERN ENERGY CO's earnings per share declined by 20.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, SOUTHWESTERN ENERGY CO increased its bottom line by earning $1.82 versus $1.73 in the prior year. For the next year, the market is expecting a contraction of 34.1% in earnings ($1.20 versus $1.82).
- Despite currently having a low debt-to-equity ratio of 0.40, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that SWN's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.53 is low and demonstrates weak liquidity.
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