Strength Seen in Southwestern Energy (SWN): Can Its 22% Jump Turn into More Strength?

Southwestern Energy (SWN) shares soared 22% in the last trading session to close at $5.88. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 5.7% gain over the past four weeks.

Increased optimism over the accelerated recovery in the energy sector following the massive natural gas price improvement primarily drove the stock. With a strong footprint in prolific shale gas basins in the United States, the company is well positioned to capitalize on the rapidly improving gas price. The leading U.S. natural gas producer has a strong balance sheet and thereby will be able to combat volatility in commodity price. Recently, Wells Fargo analyst Nitin Kumar raised the price target on the stock, reflecting rising optimism over the stock’s overall performance.

This independent oil and gas company is expected to post quarterly earnings of $0.29 per share in its upcoming report, which represents a year-over-year change of +262.5%. Revenues are expected to be $1.05 billion, up 98.4% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Southwestern Energy, the consensus EPS estimate for the quarter has been revised 1.9% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on SWN going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Southwestern Energy Company (SWN) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research