Today's Roof Leaker Stock Is Southwestern Energy (SWN)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Southwestern Energy ( SWN) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Southwestern Energy as such a stock due to the following factors:

  • SWN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $150.0 million.
  • SWN has traded 2.6 million shares today.
  • SWN is trading at 2.64 times the normal volume for the stock at this time of day.
  • SWN crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in SWN with the Ticky from Trade-Ideas. See the FREE profile for SWN NOW at Trade-Ideas

More details on SWN:

Southwestern Energy Company, an independent energy company, is engaged in the exploration, development and production of natural gas and oil in the United States. The company operates in two segments, Exploration and Production, and Midstream Services. SWN has a PE ratio of 19.4. Currently there are 7 analysts that rate Southwestern Energy a buy, 1 analyst rates it a sell, and 16 rate it a hold.

The average volume for Southwestern Energy has been 3.8 million shares per day over the past 30 days. Southwestern Energy has a market cap of $15.0 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.46 and a short float of 2.5% with 2.36 days to cover. Shares are up 10.3% year-to-date as of the close of trading on Wednesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Southwestern Energy as a buy. 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 ratings report include:
  • SWN's very impressive revenue growth greatly exceeded the industry average of 3.2%. 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 ($2.45 versus $2.00).
  • 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 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 17.51%.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

null

More from Markets

UK GDP Hits Slowest Pace in Five Years as Cold Snap Hammers Construction

UK GDP Hits Slowest Pace in Five Years as Cold Snap Hammers Construction

Amazon Profit Blast Puts Shares on Record Path, Challenging Apple as World's Bi

Amazon Profit Blast Puts Shares on Record Path, Challenging Apple as World's Bi

Global Stocks Rise on Tech Resurgence; Dollar Past 3-Month High Ahead of Q1 GDP

Global Stocks Rise on Tech Resurgence; Dollar Past 3-Month High Ahead of Q1 GDP

Daimler Shares Rise After Record Mercedes-Benz Sales, Bullish Profit Outlook

Daimler Shares Rise After Record Mercedes-Benz Sales, Bullish Profit Outlook

AMD Rises Above the Competition; Loan Losses Mount for Big Banks -- ICYMI

AMD Rises Above the Competition; Loan Losses Mount for Big Banks -- ICYMI