How Will Southwestern Energy (SWN) Stock React To This Downgrade?

NEW YORK (TheStreet) -- Southwestern Energy Co. (SWN) was downgraded to "neutral" from "buy" at Goldman Sachs (GS) on Thursday, based on a valuation call.

The firm cut its price target to $51 from $58.


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

"We rate SOUTHWESTERN ENERGY CO (SWN) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, expanding profit margins and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

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

  • SWN's very impressive revenue growth greatly exceeded the industry average of 3.1%. Since the same quarter one year prior, revenues leaped by 51.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SOUTHWESTERN ENERGY CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, SOUTHWESTERN ENERGY CO turned its bottom line around by earning $2.00 versus -$2.03 in the prior year. This year, the market expects an improvement in earnings ($2.41 versus $2.00).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Oil, Gas & Consumable Fuels industry average. The net income increased by 52.3% when compared to the same quarter one year prior, rising from $127.52 million to $194.19 million.
  • The gross profit margin for SOUTHWESTERN ENERGY CO is rather high; currently it is at 59.28%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 17.45% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 63.61% to $608.87 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 16.30%.
  • You can view the full analysis from the report here: SWN Ratings Report
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