Why Southwestern Energy (SWN) Stock is Falling Today

Southwestern Energy (SWN) stock is down as oil prices retreat.
By Amanda Schiavo ,

NEW YORK (TheStreet) -- Shares of Southwestern Energy (SWN) - Get Report are down by 8.66% to $10.44 in mid-morning trading on Wednesday, as some oil and energy related stocks take a hit from the decline in the commodity's price.

Southwestern Energy is a Houston-based energy company engaged in natural gas and oil exploration, development and production.

Oil prices are being pressured following industry data showing a rise in U.S. stockpiles, Reuters reports.

Crude oil (WTI) is slipping by 2.22% to $43.23 per barrel this morning and Brent crude is lower by 1.92% to $46.53 per barrel, according to the CNBC.com index.

U.S. crude inventories spiked by 6.3 million barrels to 486.1 million barrels for the week of November 6, data from the American Petroleum Institute showed. Analysts were expecting a rise of only 1 million barrels, Reuters added.

"You're seeing more of a plateau in U.S. production rather than a decline, I've been expecting a decline in 2016 but I think the market is in a mode of show us rather than tell us and they're just not seeing the numbers," Deutsche Bank analyst Michael Hsueh told Reuters.

The Energy Information Administration will release its weekly stockpile data at 11 a.m. ET on Thursday.

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

We rate SOUTHWESTERN ENERGY CO (SWN) 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 deteriorating net income, generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

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

  • 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 924.2% when compared to the same quarter one year ago, falling from $211.00 million to -$1,739.00 million.
  • The debt-to-equity ratio of 1.05 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 0.47, which clearly demonstrates the inability to cover short-term cash needs.
  • 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.
  • Net operating cash flow has significantly decreased to $287.00 million or 50.51% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 64.06%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 870.00% compared to the year-earlier 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.
  • You can view the full analysis from the report here: SWN

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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