Yahoo Finance Southwestern Energy Company Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next
Last week, you might have seen that Southwestern Energy Company (NYSE:SWN) released its yearly result to the market. The early response was not positive, with shares down 8.4% to US$1.42 in the past week. Southwestern Energy missed revenue estimates by 4.1%, with sales of US$3.0b, although statutory earnings per share (EPS) of US$1.65 beat expectations, coming in 5.7% ahead of analyst estimates. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Check out our latest analysis for Southwestern Energy
Following last week's earnings report, Southwestern Energy's 14 analysts are forecasting 2020 revenues to be US$3.05b, approximately in line with the last 12 months. Statutory earnings per share are expected to plunge 95% to US$0.09 in the same period. Before this earnings report, analysts had been forecasting revenues of US$3.03b and earnings per share (EPS) of US$0.29 in 2020. Analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a pretty serious reduction to EPS estimates.
The consensus price target held steady at US$2.02, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Southwestern Energy at US$3.00 per share, while the most bearish prices it at US$1.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Southwestern Energy's performance in recent years. It's pretty clear that analysts expect Southwestern Energy's revenue growth will slow down substantially, with revenues next year expected to grow 0.3%, compared to a historical growth rate of 1.1% over the past five years. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 5.1% next year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than Southwestern Energy.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Southwestern Energy's revenues are expected to perform worse than the wider market. The consensus price target held steady at US$2.02, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Southwestern Energy analysts - going out to 2023, and you can see them free on our platform here.
You can also view our analysis of Southwestern Energy's balance sheet, and whether we think Southwestern Energy is carrying too much debt, for free on our platform here.
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