It has been about a month since the last earnings report for Southwestern Energy CompanySWN . Shares have lost about 9.5% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Fourth-Quarter 2016 Results
Southwestern Energy reported fourth-quarter 2016 adjusted earnings of $0.08 per share that missed the Zacks Consensus Estimate of $0.12 following lower production.
In the prior-year quarter, the company incurred loss of $0.02 per share. The year-over-year improvement was attributable to higher oil and gas price realizations.
Quarterly operating revenues of $684 million surpassed the Zacks Consensus Estimate of $682 million but decreased from $687 million in the fourth quarter of 2015.
Production and Realized Prices
In fourth quarter, the company's oil and gas production declined 18.9% year over year to 202 billion cubic feet equivalent (Bcfe) due to limited activity level in 2016. This, in turn, was owing to lower natural gas prices .
The company's average realized gas price for the quarter, including hedges, was $2.07 per thousand cubic feet (Mcf). The reported figure was flat with the year-ago period. Oil was sold at $41.18 per barrel compared with the year-earlier level of $27.36 per barrel. Natural gas liquids were sold at $12.08 per barrel as against $7.62 in the year-ago period.
Operating income from the company's Exploration and Production (E&P) segment was $82 million. The reported figure compared favorably with an operating loss of $2,633 million in the fourth quarter of 2015. The quarterly income was primarily driven by higher realized liquids prices and decreased operating costs and expenses. This was partially offset by lower production volumes.
On a per-Mcfe basis, lease operating expenses were 87 cents compared with the prior-year quarter level of 91 cents. However, general and administrative expenses per unit of production increased to 27 cents from 20 cents in the prior-year quarter.
Operating income for the company's Midstream Services segment was $40 million for the fourth quarter compared with $72 million for the corresponding quarter in 2015. As of Dec 31, 2016, the company's midstream segment had gathered approximately 138Bcf per day.
Capex and Debt
The company's total capital expenditure during 2016 was approximately $684 million. As of Dec 31, 2016, long-term debt was $4,612.0 million, representing a debt-to-capitalization ratio of 83.4%.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been eight downward revisions for the current quarter compared to one upward. In the past month, the consensus estimate also shifted downward by 26.7% due to these changes.
Southwestern Energy Company Price and Consensus
At this time, Southwestern Energy's stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, stocks has an aggregte VGM score of'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks''style scores indicate that the company's stock is suitable for value and growth investors.
Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. Notably, the stock has a Zacks Rank # 3 (Hold). We are looking for an inline return from the stock in the next few months.
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