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What's in Store for Southwestern Energy's (SWN) Q2 Earnings?
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Southwestern Energy Company (SWN - Free Report) is set to release second-quarter 2018 results after the closing bell on Aug 2.
For the trailing four quarters, the Spring, TX-based company has a negative average earnings surprise of 9.2%, missing two estimates. Let’s see how things are shaping up for this announcement.
Which Way Are Estimates Trending?
Let’s take a look at the estimate revisions to get a clear picture of what analysts are thinking about the company before earnings release.
The Zacks Consensus Estimate for second-quarter earnings of 16 cents has seen eight upward and two downward revisions in the last 30 days. It reflects year-over-year growth of about 100%.
Southwestern Energy Company Price and EPS Surprise
The Zacks Consensus Estimate for second-quarter total oil production is pegged at 687 thousand barrels (Mbbls), up from 565 Mbbls in the year-ago period and 613 Mbbls in the last reported quarter. The Zacks Consensus Estimate for total gas production for the April-June quarter is 202 billion cubic feet (Bcf), up from 199 Bcf in the year-ago period and 197 Bcf in the last reported quarter. The Zacks Consensus Estimate for the quarter’s total production is pegged at 233 billion cubic feet equivalent (Bcfe), up 5% year over year and 3% sequentially.
Moreover, the Zacks Consensus Estimate for average oil price per barrel (including hedges) is at $56, up from $40.56 in the previous-year quarter and in line with the last reported quarter. The Zacks Consensus Estimate for average realized gas price is pinned at $2 per thousand cubic feet (Mcf), down from $2.67 in first-quarter 2018 and $ 2.15 in the second quarter of 2017.
Although the probable increase in total natural gas equivalent production will support the top line for the upstream business, lower expected price of natural gas will act as a dampener. Moreover, the Zacks Consensus Estimate for gas volumes gathered from Midstream services for the quarter is pegged at 98 Bcf, reflecting a 23.4% decline from the year-ago period.
Investors should also note that the company’s balance sheet is highly levered. The stock has a debt-to-capitalization ratio of 66.7%, significantly higher than the industry’s 46.5%.
What Does Our Model Unveil?
Our proven model does not show that Southwestern Energy is likely to beat the Zacks Consensus Estimate this earnings season. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.
Earnings ESP: Earnings ESP represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate. The energy player has an ESP of -1.42%. 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 #2. Though a Zacks Rank of #2 increases the predictive power of ESP, a negative ESP makes surprise prediction difficult.
Meanwhile, we caution against Sell-rated stocks (Zacks Ranks #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies from the energy sector which, according to our model, have the right combination of elements to post an earnings beat this quarter:
Occidental Petroleum Corporation (OXY - Free Report) has an Earnings ESP of +1.75% and a Zacks Rank #2. The firm is expected to release earnings on Aug 8, after the closing bell.
Pioneer Natural Resources Company (PXD - Free Report) has an Earnings ESP of +0.27% and a Zacks Rank #3.
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Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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What's in Store for Southwestern Energy's (SWN) Q2 Earnings?
Southwestern Energy Company (SWN - Free Report) is set to release second-quarter 2018 results after the closing bell on Aug 2.
For the trailing four quarters, the Spring, TX-based company has a negative average earnings surprise of 9.2%, missing two estimates. Let’s see how things are shaping up for this announcement.
Which Way Are Estimates Trending?
Let’s take a look at the estimate revisions to get a clear picture of what analysts are thinking about the company before earnings release.
The Zacks Consensus Estimate for second-quarter earnings of 16 cents has seen eight upward and two downward revisions in the last 30 days. It reflects year-over-year growth of about 100%.
Southwestern Energy Company Price and EPS Surprise
Southwestern Energy Company Price and EPS Surprise | Southwestern Energy Company Quote
Factors at Play
The Zacks Consensus Estimate for second-quarter total oil production is pegged at 687 thousand barrels (Mbbls), up from 565 Mbbls in the year-ago period and 613 Mbbls in the last reported quarter. The Zacks Consensus Estimate for total gas production for the April-June quarter is 202 billion cubic feet (Bcf), up from 199 Bcf in the year-ago period and 197 Bcf in the last reported quarter. The Zacks Consensus Estimate for the quarter’s total production is pegged at 233 billion cubic feet equivalent (Bcfe), up 5% year over year and 3% sequentially.
Moreover, the Zacks Consensus Estimate for average oil price per barrel (including hedges) is at $56, up from $40.56 in the previous-year quarter and in line with the last reported quarter. The Zacks Consensus Estimate for average realized gas price is pinned at $2 per thousand cubic feet (Mcf), down from $2.67 in first-quarter 2018 and $ 2.15 in the second quarter of 2017.
Although the probable increase in total natural gas equivalent production will support the top line for the upstream business, lower expected price of natural gas will act as a dampener. Moreover, the Zacks Consensus Estimate for gas volumes gathered from Midstream services for the quarter is pegged at 98 Bcf, reflecting a 23.4% decline from the year-ago period.
Investors should also note that the company’s balance sheet is highly levered. The stock has a debt-to-capitalization ratio of 66.7%, significantly higher than the industry’s 46.5%.
What Does Our Model Unveil?
Our proven model does not show that Southwestern Energy is likely to beat the Zacks Consensus Estimate this earnings season. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.
Earnings ESP: Earnings ESP represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate. The energy player has an ESP of -1.42%. 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 #2. Though a Zacks Rank of #2 increases the predictive power of ESP, a negative ESP makes surprise prediction difficult.
Meanwhile, we caution against Sell-rated stocks (Zacks Ranks #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies from the energy sector which, according to our model, have the right combination of elements to post an earnings beat this quarter:
Murphy Oil Corporation (MUR - Free Report) has an Earnings ESP of +5.99% and a Zacks Rank #2. The company is set to report second-quarter results on Aug 8, after the closing bell. You can see the complete list of today’s Zacks #1 Rank stocks here.
Occidental Petroleum Corporation (OXY - Free Report) has an Earnings ESP of +1.75% and a Zacks Rank #2. The firm is expected to release earnings on Aug 8, after the closing bell.
Pioneer Natural Resources Company (PXD - Free Report) has an Earnings ESP of +0.27% and a Zacks Rank #3.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>