Southwestern Energy Company (NYSE:SWN), an energy company based in United States, saw significant share price volatility over the past couple of months on the NYSE, rising to the highs of $6.5 and falling to the lows of $3.6. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Southwestern Energy’s current trading price of $3.6 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Southwestern Energy’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for Southwestern Energy

What’s the opportunity in Southwestern Energy?

Southwestern Energy appears to be overvalued by 52% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$3.60 on the market compared to my intrinsic value of $2.37. This means that the buying opportunity has probably disappeared for now. Another thing to keep in mind is that Southwestern Energy’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

Can we expect growth from Southwestern Energy?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. Southwestern Energy’s earnings over the next few years are expected to increase by 69.24%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in SWN’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe SWN should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.