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Newfield Exploration Company (NFX) Showing Signs Of Being Water-Logged And Getting Wetter

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 Newfield Exploration Company (NFX) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Newfield Exploration Company as such a stock due to the following factors:

  • NFX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $57.5 million.
  • NFX has traded 8.2 million shares today.
  • NFX traded in a range 275.3% of the normal price range with a price range of $2.51.
  • NFX traded below its daily resistance level (quality: 89 days, meaning that the stock is crossing a resistance level set by the last 89 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' 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 negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on NFX:

Newfield Exploration Company, an independent energy company, engages in the exploration, development, and production of crude oil, natural gas, and natural gas liquids. Its areas of operation include the Mid-Continent, the Rocky Mountains, and onshore Gulf Coast, as well as Malaysia and China. Currently there are 7 analysts that rate Newfield Exploration Company a buy, no analysts rate it a sell, and 8 rate it a hold.

The average volume for Newfield Exploration Company has been 2.7 million shares per day over the past 30 days. Newfield has a market cap of $3.8 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.42 and a short float of 6.8% with 2.84 days to cover. Shares are down 1.3% year-to-date as of the close of trading on Friday.

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

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Newfield Exploration Company as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and disappointing return on equity.

Highlights from the ratings report include:

  • The debt-to-equity ratio of 1.19 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.49, which clearly demonstrates the inability to cover short-term cash needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, NEWFIELD EXPLORATION CO's return on equity significantly trails that of both the industry average and the S&P 500.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Regardless of the rise in share value over the previous year, we feel that the risks involved in investing in this stock do not compensate for any future upside potential.
  • NEWFIELD EXPLORATION CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, NEWFIELD EXPLORATION CO swung to a loss, reporting -$10.24 versus $3.99 in the prior year. This year, the market expects an improvement in earnings ($1.90 versus -$10.24).
  • The gross profit margin for NEWFIELD EXPLORATION CO is currently very high, coming in at 74.69%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 1.44% trails the industry average.

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