uploads///SWN Q Post Annotations

How Did Southwestern Energy’s Stock React to 1Q16 Earnings?

By

Apr. 26 2016, Updated 4:54 p.m. ET

Southwestern Energy’s stock price action on the day of 1Q16 earnings

Southwestern Energy (SWN) announced its 1Q16 earnings after the Market closed on April 21, 2016. On the day of the earnings release, SWN’s stock fell 1.2% to close at $10.67. In after-hours trade, SWN’s stock traded as high as $11.25. In the seven weeks leading up to the earnings release, Southwestern Energy’s stock had already risen a whopping ~85%, mainly due to the ~35% jump in natural gas prices during the same period.

Article continues below advertisement

A change in Southwestern Energy’s stock price trend

Falling crude oil (UCO) and natural gas (UGAZ) prices over the last two years have led to a falling trend in the entire upstream sector. However, as seen in the chart above, in February 2016, Southwestern Energy’s stock price registered a ‘higher low’, when compared with its previous low in January. Subsequently in March, SWN’s stock price also formed a ‘higher high’. ‘Higher low’ and ‘higher high’ are the basic requirements for any new uptrend to take place.

SWN’s 2016 performance

In 2016, SWN is outperforming bigger upstream companies from the SPDR S&P 500 ETF (SPY). In 2016, SWN has risen ~50%, whereas Occidental Petroleum (OXY), Noble Energy (NBL), and EOG Resources (EOG) have risen ~11%, ~7%, and ~12%, respectively.

SWN’s stock price movement after previous earnings releases

In the last six quarters, Southwestern Energy has beaten earnings expectations on three occasions: 4Q15, 3Q15, and 4Q14. SWN reported its 4Q15 earnings after the Market closed on February 25, 2015. In 4Q15, excluding one-time items, SWN reported a loss per share of $0.02, which was $0.02 better than the consensus estimate of a loss per share of $0.04. Despite better-than-expected earnings, SWN’s stock price fell ~17% in the following three trading sessions.

A similar reaction was observed after 3Q15 and 4Q14 earnings. Southwestern Energy’s stock fell ~10% and ~18% in three and eight sessions even after the company beat the consensus earnings estimates by $0.04 per share and $0.01 per share, respectively.

Advertisement

More From Market Realist