Southwestern Energy (SWN) Q1 Earnings: A Beat In The Cards?

Independent energy firm, Southwestern Energy Co. (NYSE:SWN) is set to release first-quarter 2017 results on Apr 27, after the closing bell.

The Spring, TX-based upstream player’s earnings surprise history is not impressive. The company missed the Zacks Consensus Estimate in two of the last four quarters with an average negative surprise of 1.29%. Let’s see how things are shaping up for this announcement.

Why a Likely Positive Surprise?

Our proven model shows that Southwestern Energy is likely to beat on earnings because it has the right combination of two key ingredients.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +5.88%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Southwestern Energy carries a Zacks Rank #3 (Hold), which when combined with +5.88% ESP, makes us confident about an earnings beat.

Please note that stocks with Zacks Ranks #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings. The Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

What is Driving the Better-Than-Expected Earnings?

The natural gas pricing scenario was much healthier during first quarter than the year-earlier period. This turned out to be favorable for exploration and production companies as they could sell the commodity at much higher prices. The improved rig count data issued by Baker Hughes Inc. (NYSE:BHI) clearly indicates that more of these firms are gathering to the U.S. oil and gas patches.

Share Price Performance

The first three months of this year were favorable for the upstream operations of Southwestern Energy. However, the company’s share price chart for that first quarter shows that the stock underperformed the Zacks categorized Oil & Gas-U.S Exploration & Production industry. During the aforesaid period, Southwestern Energy’s shares lost 24.5% compared with 10.9% decrease for the broader industry.

Nonetheless, the Zacks Consensus Estimate for the company’s first-quarter earnings have been revised upward over the last 30 days.

Other Stocks to Consider

Southwestern Energy is not the only company looking up this earnings season. Here are some other companies from the same space that have the right combination of elements to post an earnings beat.

Chesapeake Energy Corp. (NYSE:CHK) has an Earnings ESP of +5.00% and a Zacks Rank #3. The company is expected to release earnings on May 4. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Williams Partners L.P. (NYSE:WPZ) has an Earnings ESP of +12.50% and a Zacks Rank #3. The partnership is expected to release earnings on May 3.

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