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Could Southwestern Energy’s Profit Streak Continue in 3Q17?

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Net income estimates

Southwestern Energy (SWN) is set to report its 3Q17 earnings on October 26, 2017, after the market closes. For 3Q17, excluding any one-time items, the current consensus net income estimate for Southwestern Energy (SWN) is ~$78 million. 

On a year-over-year basis, SWN is expected to report ~292% higher profit when compared with a profit of ~$12 million in 3Q16. On a sequential basis and excluding any one-time items, SWN’s 3Q17 consensus net income estimate is higher from a profit of ~$40 million in 2Q17.

Based on the current consensus net income estimate, SWN is expected to report its fifth consecutive profit. SWN’s peer Occidental Petroleum (OXY) is expecting a higher profit of ~$109 million in 3Q17 from a loss of ~$112 million in 3Q16. Next, we will look at SWN’s 3Q17 EPS estimates.

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EPS estimates

For 3Q17, excluding any one-time items, Wall Street analysts’ current consensus EPS (earnings per share) estimate for SWN is $0.10. On a year-over-year basis, Southwestern Energy’s 3Q17 current consensus EPS estimate is higher by $0.07 when compared with its 3Q16 adjusted EPS of $0.03. Sequentially, SWN’s 3Q17 current consensus EPS estimate is slightly higher than $0.08 in 2Q17.

Southwestern Energy’s 2Q17 earnings performance

In its most recent earnings release in August 2017, Southwestern Energy reported a worse-than-expected profit of ~$40 million in 2Q17. Wall Street analysts were expecting a profit of ~$75 million. 

On a year-over-year basis, SWN cut its losses by more than 100%. In 2Q16, SWN reported a loss of $34 million. However, on a sequential basis and excluding any one-time items, SWN’s profit fell ~54%. SWN reported a profit of ~$87 million in 1Q17.

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SWN’s peers ConocoPhillips (COP) and Pioneer Natural Resources (PXD), which are also part of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), reported adjusted net incomes of ~$178 million and ~$38 million, respectively, in 2Q17. Like SWN, COP and PXD also turned their 2Q16 losses into profits in 2Q17.

In this series…

In this series, we will also look at SWN’s revenues expectations, SWN’s production guidance, and cash flow estimates. We’ll also estimate the odds of Southwestern Energy beating its EPS expectations and Wall Street Analyst are saying about SWN ahead of its earnings.

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