A month has gone by since the last earnings report for Southwestern Energy (SWN). Shares have lost about 6.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Southwestern Energy due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Southwestern Energy’s Q1 Earnings & Revenues Beat Estimates
Southwestern Energy Companyreported first-quarter 2019 adjusted earnings of 27 cents per share, surpassing the Zacks Consensus Estimate of 23 cents. However, the bottom line decreased from 28 cents per share registered in the year-ago period.
Quarterly operating revenues totaled $990 million, which outpaced the Zacks Consensus Estimate of $618 million and also increased from $920 million in the first quarter of 2018.
Higher realized natural gas prices and lower expenses, which was partially offset by lower realized liquids prices, aided the quarterly results.
Production and Realized Prices
During the first quarter, the company’s total production decreased 19.5% year over year to 182 billion cubic feet equivalent (Bcfe).
The company’s average realized gas price for the quarter, including hedges, rose to $2.92 per thousand cubic feet (Mcf) from $2.77 per Mcf in the year-ago period. Oil was sold at $47.82 per barrel compared with the year-earlier level of $56.01. Natural gas liquids were sold at $15.05 per barrel than $15.43 in the year-ago period.
In the quarter under review, operating income from the Exploration and Production (E&P) segment was $210 million compared with $238 million in the last-year comparable quarter.
On a per-Mcfe basis, lease operating expenses were 90 cents compared with the prior-year quarter level of 94 cents. General and administrative expenses per unit of production were 19 cents compared with 21 cents in the prior-year quarter.
Operating income at the company’s Midstream Services segment totaled $3 million in the first quarter compared with $17 million in the year-ago quarter.
Capex and Debt
Southwestern Energy’s total capital expenditure during the first quarter was approximately $325 million. As of Mar 31, 2019, the company’s long-term debt was $2.3 billion, which represents a debt-to-capitalization ratio of 43.6%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
Currently, Southwestern Energy has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Southwestern Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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