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Barbarian At The Gate: Weatherford International (WFT)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Weatherford International (WFT) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Weatherford International as such a stock due to the following factors:

  • WFT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $108.3 million.
  • WFT has traded 12.4 million shares today.
  • WFT traded in a range 300.4% of the normal price range with a price range of $1.14.
  • WFT traded above its daily resistance level (quality: 3 days, meaning that the stock is crossing a resistance level set by the last 3 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in WFT with the Ticky from Trade-Ideas. See the FREE profile for WFT NOW at Trade-Ideas

More details on WFT:

Weatherford International Ltd. provides equipment and services used in the drilling, evaluation, completion, production, and intervention of oil and natural gas wells worldwide. Currently there are 10 analysts that rate Weatherford International a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Weatherford International has been 7.6 million shares per day over the past 30 days. Weatherford International has a market cap of $12.4 billion and is part of the basic materials sector and energy industry. The stock has a beta of 2.14 and a short float of 1.7% with 1.89 days to cover. Shares are up 44.3% year to date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Weatherford International as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and poor profit margins.

Highlights from the ratings report include:

  • Compared to its closing price of one year ago, WFT's share price has jumped by 65.94%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.5%. Since the same quarter one year prior, revenues slightly increased by 0.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The debt-to-equity ratio of 1.09 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, WFT maintains a poor quick ratio of 0.70, which illustrates the inability to avoid short-term cash problems.
  • The gross profit margin for WEATHERFORD INTERNATIONAL is currently lower than what is desirable, coming in at 29.74%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.57% significantly trails the industry average.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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