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Southwestern Energy Company Stock Hold Recommendation Reiterated (SWN)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK (TheStreet) -- Southwestern Energy Company (NYSE:SWN) has been reiterated by TheStreet Ratings as a hold with a ratings score of C-. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and generally higher debt management risk.

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Highlights from the ratings report include:

  • SWN's revenue growth has slightly outpaced the industry average of 0.7%. Since the same quarter one year prior, revenues slightly increased by 3.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has slightly increased to $461.47 million or 4.97% when compared to the same quarter last year. In addition, SOUTHWESTERN ENERGY CO has also modestly surpassed the industry average cash flow growth rate of 0.00%.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, SOUTHWESTERN ENERGY CO's return on equity significantly trails that of both the industry average and the S&P 500.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 324.3% when compared to the same quarter one year ago, falling from $158.53 million to -$355.58 million.

Southwestern Energy Company, an independent energy company, engages in the exploration, development, and production of natural gas and oil primarily in the United States. The company operates through two segments, Exploration and Production, and Midstream Services. Southwestern Energy has a market cap of $12.8 billion and is part of the basic materials sector and energy industry. Shares are up 10.7% year to date as of the close of trading on Thursday.

You can view the full Southwestern Energy Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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