Southwestern Energy Earnings: Profit Streak Snapped by a Loss

S&P 500 (NYSE:SPY) component Southwestern Energy Co. (NYSE:SWN) swung to a loss in the second quarter, missing analysts’ forecast. Southwestern Energy is an independent energy company that, through its subsidiaries, explores, develops and produces natural gas and crude oil.

Investing Insights: Is TV the Next Bullish Catalyst for Apple’s Stock?

Southwestern Energy Co. Earnings Cheat Sheet

Results: Reported a loss of $488.1 million ($1.40 per diluted share) in the quarter. The utility-gas distribution had net income of $167.5 million or 48 cents per share in the year-earlier quarter.

Revenue: Fell 21.6% to $599.7 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Southwestern Energy Co. fell short of the mean analyst estimate of 26 cents per share. It fell short of the average revenue estimate of $636.8 million.

Quoting Management: “The second quarter was challenging for any company drilling for natural gas. Southwestern Energy has embraced those challenges and our results show we had a very strong quarter,” remarked Steve Mueller, President and Chief Executive Officer of Southwestern Energy. “Our costs continue to be low, with all-in cash operating costs of $1.20 per Mcfe for the second quarter of 2012 and our Fayetteville and Marcellus drilling programs continue to provide a meaningful drilling inventory at the prices we see going forward. Finally, our New Ventures activities in the Brown Dense play are providing encouraging results and we are excited about the other ideas we are pursuing. We see many challenges as we look toward the second half of 2012, but those challenges also bring opportunities that have the potential to make 2012 one of the most exciting years in our history.”

Key Stats:

The company has now come in under analyst forecasts for three quarters in a row. It missed the mark by one cent in the first quarter and by 3 cents in the fourth quarter of the last fiscal year.

The company’s loss in the latest quarter follows profits in the previous three quarters. The company reported a profit of $107.7 million in the first quarter, a profit of $158.5 million in the fourth quarter of the last fiscal year and $175.2 million in the third of the last fiscal year.

Revenue has fallen in the past two quarters. In the first quarter, revenue declined 2.9% to $656.5 million from the year-earlier quarter.

The company’s cost of sales slipped to $184.2 million, a dip of 33.3% from a year ago. Last quarter, cost of sales was 30.7% of revenue versus 33.3% a year earlier.

Looking Forward: Over the past ninety days, the average estimate for the third quarter has fallen from 33 cents per share to 29 cents, indicating that analysts are growing pessisimistic about the company’s performance next quarter. The average estimate for the fiscal year is $1.19 per share, down from $1.33 ninety days ago.

Stocks with improving earnings metrics are worthy of your extra attention. In fact, “E = Earnings Are Increasing Quarter-Over-Quarter” is a core component of our CHEAT SHEET investing framework for this very reason. Don’t waste another minute — click here and get our CHEAT SHEET stock picks now.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

Don’t Miss These Additional Hot Stories:

Is Boeing Stock a DREAM Investment?

Are These 5 TOP Stock Performers Overbought?

Time to Buy or Sell BofA Stock?