NEW YORK (TheStreet) -- Southwestern Energy (SWN) shares are down 0.9% to $28.68 in trading on Monday as oil prices fall today on a strengthening dollar and a warning from OPEC that oil prices will remain low for the foreseeable future.
Crude prices have rallied over 40% from its lows in recent weeks as the rise in global supplies have tapered over the past few months.
Analysts at Baker Hughes (BHI) recently noted that while oil rig counts continue to fall to multi-year lows, the pace of the decline has slowed as prices have recovered.
Separately, today OPEC said that it does not expect oil to trade above $100 a barrel anytime within the next decade and sees oil prices hovering around the $76 per barrel range by 2025, according to the Wall Street Journal.
Industry standard Brent crude for June delivery is down 1.10%, or 72 cents, to $64.67 per barrel, while U.S. West Texas crude is down 0.61%, or 36 cents, to $59.03 per barrel in trading today.
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 largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, disappointing return on equity and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is somewhat low, currently at 0.73, and is less than that of the industry average, implying that there has been a relatively successful effort in the 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.
- 49.09% is the gross profit margin for SOUTHWESTERN ENERGY CO which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, SWN's net profit margin of 8.36% compares favorably to the industry average.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, SOUTHWESTERN ENERGY CO's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 59.8% when compared to the same quarter one year ago, falling from $194.19 million to $78.00 million.
- You can view the full analysis from the report here: SWN Ratings Report