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Should Value Investors Buy Southwestern Energy (SWN) Stock?

Zacks Equity Research

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company value investors might notice is Southwestern Energy (SWN). SWN is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 11.26, which compares to its industry's average of 18.85. Over the last 12 months, SWN's Forward P/E has been as high as 16.15 and as low as 2.80, with a median of 5.10.

SWN is also sporting a PEG ratio of 0.66. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. SWN's PEG compares to its industry's average PEG of 1.60. Over the last 12 months, SWN's PEG has been as high as 0.76 and as low as 0.31, with a median of 0.48.

Investors should also recognize that SWN has a P/B ratio of 0.98. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.89. SWN's P/B has been as high as 1.03 and as low as 0.21, with a median of 0.36, over the past year.

These are only a few of the key metrics included in Southwestern Energy's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, SWN looks like an impressive value stock at the moment.


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