Back to top

Southwestern Energy (SWN) Q2 Earnings: What's in the Cards?

Read MoreHide Full Article

Independent energy firm, Southwestern Energy Company (SWN - Free Report) , is set to report second-quarter 2017 results on Aug 4, after the closing bell.

Last quarter, the company had delivered earnings of 18 cents per share that beat the Zacks Consensus Estimate of 17 cents. Notably, the company incurred a loss of 8 cents in the year-ago quarter. Let’s see how things are shaping up for this announcement.    

Factors to Consider this Quarter

Southwestern Energy has a diversified reserve base in multiple U.S. basins and remains focused on investments in high-return areas such as Fayetteville, Appalachia and other new ventures. Moreover, the company maintains a competitive cost structure, which contributes to steady growth and returns throughout the business cycle. The benefits are expected to be reflected in the second-quarter earnings as well.

Despite these positives, Southwestern Energy’s shares have underperformed the industry in the last three months. During the aforesaid period, shares of the company have lost 23.8% compared with the industry's growth of 3.4%.

However, natural gas price fell considerably from the level it was trading during early 2014. This provides little space for Southwestern Energy to flourish, as the commodity accounts for almost all of the company’s reserves and production. A volatile macro backdrop also raises concern as it might compel the company to perform below expectations.

Earnings Whispers

Our proven model does not conclusively show that Southwestern Energy will beat estimates this quarter. That is because a stock needs to have a positive Earnings ESP  and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 16 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Southwestern Energy carries a Zacks Rank #4 (Sell). Please note that Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement, especially when the company is witnessing negative estimate revisions.  

Other Stocks to Consider

Here are some firms that you may want to consider on the basis of our model. These have the right combination of elements to beat earnings this quarter.

Global Partners LP (GLP - Free Report) has an Earnings ESP of +60.00% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here

Chesapeake Energy Corporation (CHK - Free Report) has an Earnings ESP of + 7.14% and a Zacks Rank #3.

The Williams Companies Inc (WMB - Free Report) has an Earnings ESP of + 50.00% and a Zacks Rank #3.

Will You Make a Fortune on the Shift to Electric Cars?                        
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>

More from Zacks Analyst Blog

You May Like