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Long term investing works well, but it doesn't always work for each individual stock. We really hate to see fellow investors lose their hard-earned money. Spare a thought for those who held Southwestern Energy Company (NYSE:SWN) for five whole years - as the share price tanked 92%. And some of the more recent buyers are probably worried, too, with the stock falling 23% in the last year. Shareholders have had an even rougher run lately, with the share price down 21% in the last 90 days.
We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
Southwestern Energy became profitable within the last five years. That would generally be considered a positive, so we are surprised to see the share price is down. Other metrics might give us a better handle on how its value is changing over time.
The revenue decline of 2.4% isn't too bad. But it's quite possible the market had expected better; a closer look at the revenue trends might explain the pessimism.
The chart below shows how revenue and earnings have changed with time, (if you click on the chart you can see the actual values).
Southwestern Energy is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. If you are thinking of buying or selling Southwestern Energy stock, you should check out this free report showing analyst consensus estimates for future profits.
A Different Perspective
We regret to report that Southwestern Energy shareholders are down 23% for the year. Unfortunately, that's worse than the broader market decline of 0.7%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. However, the loss over the last year isn't as bad as the 40% per annum loss investors have suffered over the last half decade. We'd need to see some sustained improvements in the key metrics before we could muster much enthusiasm. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.