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Earnings Estimates Rising for Southwestern Energy (SWN): Will It Gain?

Southwestern Energy (SWN) could be a solid choice for investors given the company's remarkably improving earnings outlook. While the stock has been a strong performer lately, this trend might continue since analysts are still raising their earnings estimates for the company.

The upward trend in estimate revisions for this independent oil and gas company reflects growing optimism of analysts on its earnings prospects, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- is principally built on this insight.

The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.

Consensus earnings estimates for the next quarter and full year have moved considerably higher for Southwestern Energy, as there has been strong agreement among the covering analysts in raising estimates.

The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:

12 Month EPS

Current-Quarter Estimate Revisions

The company is expected to earn $0.05 per share for the current quarter, which represents a year-over-year change of -37.5%.

Over the last 30 days, one estimate has moved higher for Southwestern Energy while one has gone lower. As a result, the Zacks Consensus Estimate has increased 26.92%.

Current-Year Estimate Revisions

The company is expected to earn $0.26 per share for the full year, which represents a change of -57.38% from the prior-year number.

There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, two estimates have moved up for Southwestern Energy versus no negative revisions. This has pushed the consensus estimate 9.03% higher.

Favorable Zacks Rank

The promising estimate revisions have helped Southwestern Energy earn a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.

Bottom Line

While strong estimate revisions for Southwestern Energy have attracted decent investments and pushed the stock 16.2% higher over the past four weeks, further upside may still be left in the stock. So, you may consider adding it to your portfolio right away.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

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