NEW YORK (TheStreet) -- Shares of Southwestern Energy Co. (SWN) are flat at $29.26 in pre-market trade after it was reported that the Houston-based independent energy company is a stubborn believer in the future profitability of natural gas, the New York Times reports.
Steven Mueller, Southwestern's CEO has said that "I'd rather have the gas to myself with no one following." "Most of the companies - on the pure economics, oill versus gas - think we are crazy," Mueller told the Times. "I mean, when I walk in the room it's like, 'They're crazy, they haven't gone to oil.' "
The company has jumped to become the fourth-largest producer of natural gas from being the nation's 40th. And Mueller continues to sign big deals. Since 2007, Southwestern's Fayetteville production has risen 800% and its reserves are up 570%, the Times noted.
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Mueller argues that natural gas has a bright future, given that it is increasingly replacing coal for utilities. He says the day will come when foreign manufacturers will see the low price of American natural gas as so attractive that they will move their plants en masse to the U.S., building a huge new market, according to the Times.
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, growth in earnings per share and increase in net income. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 6.7%. Since the same quarter one year prior, revenues slightly increased by 6.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- SOUTHWESTERN ENERGY CO has improved earnings per share by 13.2% 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. This trend suggests that the performance of the business is improving. 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 ($2.30 versus $2.00).
- The current debt-to-equity ratio, 0.42, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that SWN's debt-to-equity ratio is low, the quick ratio, which is currently 0.54, displays a potential problem in covering short-term cash needs.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. 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 has underperformed the S&P 500 Index, declining 20.11% 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.
- You can view the full analysis from the report here: SWN Ratings Report