Southwestern Energy (SWN) Stock Lower Today as Energy Sector Slumps

Shares of Southwestern Energy (SWN) are down as the energy sector declined almost 2% and oil prices fell.
By Sebastian Silva ,

NEW YORK (TheStreet) -- Shares of Southwestern Energy Co. (SWN) - Get Report are down 2.42% to $21.75 in afternoon trading today as the energy sector slumped almost 2% and oil prices fell.

Both benchmarks are lower, with West Texas Intermediate down 2.88% to $48.56 at 3:12 p.m. in New York. Brent fell 3.54% to $57.04.

One of the catalysts pushing oil lower is a rallying dollar. The WSJ Dollar Index rose 0.9%.

The dollar's strength sent oil prices lower on Tuesday, with Brent falling more than U.S. crude as traders took profits on recent highs in Brent's premium, traders told Reuters.

Expectations of a U.S. interest rate hike as soon as June helped fuel the dollar's surge to multi-year highs, making dollar-denominated commodities costlier for holders of other currencies.

"The dollar's might is creating unexpected headwinds for oil. Brent particularly is taking it harder than WTI as people unwind and take profit in the spread between the two," Tyche Capital Advisors managing member Tariq Zahir told Reuters.

Separately, the average recommendation of 30 brokers' estimates is 2.7, with a 2 rating representing an "outperform" rating and a 3 a "hold." The mean price target is $31.33.

Southwestern Energy is Houston-based independent energy company engaged in natural gas and oil exploration, development and production focused within the U.S.

TheStreet Ratings team rates SOUTHWESTERN ENERGY CO as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate SOUTHWESTERN ENERGY CO (SWN) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and a generally disappointing performance in the stock itself."

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

  • The revenue growth came in higher than the industry average of 19.8%. Since the same quarter one year prior, revenues slightly increased by 6.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 115.9% when compared to the same quarter one year prior, rising from $144.49 million to $312.00 million.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, SOUTHWESTERN ENERGY CO has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • SWN's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 39.26%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The debt-to-equity ratio of 1.49 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.11, which clearly demonstrates the inability to cover short-term cash needs.
  • You can view the full analysis from the report here: SWN Ratings Report
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