NEW YORK (TheStreet) -- Shares of Southwestern Energy (SWN) fell more than 5% to a 52-week low of $27.56 in morning trading Tuesday after the company on Monday said it would increase its capital spending program in 2015.
The Houston-based company said it is planning for a capital expenditure program of approximately $2.6 billion, up from a previous projection of $2.4 billion. This excludes acquisition capital for transactions announced in the fourth quarter.
Southwestern is also targeting a production increase of approximately 28% next year.
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Southwestern made the announcements after several other energy companies made clear their intentions to reduce spending as oil prices hit five-year lows. West Texas Intermediate crude for February delivery touched $53.52 on Monday, its lowest price since May 2009, as a global oversupply continues to drag down oil prices.
Brent crude was down 0.52% to $57.58 at 11:28 a.m. on Tuesday.
Separately, 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 ($2.29 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'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 29.17%, 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. 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