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TheStreet Open House

Will This Downgrade Negatively Impact Swift Energy (SFY) Stock Today?

NEW YORK (TheStreet) -- Swift Energy Co. (SFY) was downgraded to "underperform" from "neutral" at Credit Suisse on Tuesday.

The firm said it downgraded its rating for the company, which is involved in developing, exploring, acquiring and operating oil and natural gas properties, based on its 2014 first quarter results.

Swift Energy reported net income for the most recent quarter was $5.4 million, or 12 cents per diluted share, compared to $7.2 million, or 17 cents per diluted share from the year ago quarter.

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Revenue for the 2014 first quarter increased 1% to $148.6 million from $146.5 million for the 2013 first quarter.

Swift Energy stock is up 10.97% to $12.14. 

TheStreet Ratings team rates SWIFT ENERGY CO as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate SWIFT ENERGY CO (SFY) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity, generally disappointing historical performance in the stock itself, deteriorating net income and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The debt-to-equity ratio of 1.13 is relatively high when compared with the industry average, suggesting a need for better debt level management.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, SWIFT ENERGY CO's return on equity significantly trails that of both the industry average and the S&P 500.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, SFY has underperformed the S&P 500 Index, declining 12.83% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • The change in net income from the same quarter one year ago has exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has decreased by 24.9% when compared to the same quarter one year ago, dropping from $7.21 million to $5.41 million.
  • SWIFT ENERGY CO's earnings per share declined by 25.0% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, SWIFT ENERGY CO swung to a loss, reporting -$0.45 versus $0.48 in the prior year. This year, the market expects an improvement in earnings ($0.08 versus -$0.45).
  • You can view the full analysis from the report here: SFY Ratings Report
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