Markets
WTI

Southwestern Energy (SWN) Q4 Earnings: What's in the Cards?

Independent natural gas operator, Southwestern Energy Co.SWN is set to release fourth-quarter 2016 results on Feb 24, after the market closes .

The Spring, TX-based upstream player has a good earnings surprise history. The company beat estimates in three of the last four quarters with an average positive surprise of 19.55%. In the preceding three-month period, it had a negative earnings surprise of 50.00%.

Let's see how things are shaping up for this announcement.

Southwestern Energy Company Price and EPS Surprise

Southwestern Energy Company Price and EPS Surprise | Southwestern Energy Company Quote

Factors to Consider This Quarter

Southwestern Energy has a diversified reserve base in multiple U.S. basins and remains focused on investments in high-return areas like Fayetteville, Appalachia and New Ventures. Moreover, the company maintains a competitive cost structure, which could contribute to steady growth and returns throughout the business cycle. To this end, it has initiated a plan to accelerate investment of an additional $500 million (allocated from the Jul 2016 equity offering) into high return projects. Of this, about $375 million is expected to be invested by the end of 2016. The company expects the benefits from these investments to be reflected in the fourth-quarter results.

However, an oversupplied U.S. natural gas market with low demand provides little space for Southwestern Energy to flourish. This is because the commodity accounts for almost all of the company's reserves and production. A volatile macro backdrop also raises caution as it might result in the company's underperformance.

Earnings Whispers

Our proven model does not conclusively show that Southwestern Energy is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.

Zacks ESP : Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at 0.00%. Both the Most Accurate estimate and the Zacks Consensus Estimate for Southwestern Energy stand at 13 cents. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter .

Zacks Rank : Southwestern carries a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, the company's Earnings ESP of 0.00% makes surprise prediction difficult.

We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies in the energy sector that investors may consider, as our model shows that they have the right combination of elements to beat estimates this quarter:

Sunrun Inc. RUN , which is expected to release fourth-quarter earnings results on Mar 8, has an Earnings ESP of +244.44% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

Northern Oil and Gas, Inc. NOG has an Earnings ESP of +25.00% and a Zacks Rank #1. It is expected to release earnings results on Mar 1.

W&T Offshore, Inc. WTI has an Earnings ESP of +66.67% and a Zacks Rank #1. The company is expected to release earnings results on Mar 1.

The Best Place to Start Your Stock Search

Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks - absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Southwestern Energy Company (SWN): Free Stock Analysis Report

W&T Offshore, Inc. (WTI): Free Stock Analysis Report

Northern Oil and Gas, Inc. (NOG): Free Stock Analysis Report

Sunrun Inc. (RUN): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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


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

In This Story

WTI SWN RUN NOG

Other Topics

Earnings Stocks

Latest Markets Videos

    Zacks

    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.

    Learn More