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Trade-Ideas: Pioneer Natural Resources Company (PXD) Is Today's "Roof Leaker" Stock

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 Pioneer Natural Resources Company ( PXD) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Pioneer Natural Resources Company as such a stock due to the following factors:

  • PXD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $246.1 million.
  • PXD has traded 808,679 shares today.
  • PXD is trading at 1.54 times the normal volume for the stock at this time of day.
  • PXD crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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

More details on PXD:

Pioneer Natural Resources Company operates as an independent oil and gas exploration and production company in the United States. The company produces and sells oil, natural gas liquids (NGL), and gas. The stock currently has a dividend yield of 0%. Currently there are 16 analysts that rate Pioneer Natural Resources Company a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Pioneer Natural Resources Company has been 1.7 million shares per day over the past 30 days. Pioneer Natural has a market cap of $26.5 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.80 and a short float of 3.5% with 3.40 days to cover. Shares are up 0.3% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Pioneer Natural Resources Company as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 7.8%. Since the same quarter one year prior, revenues rose by 30.7%. 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.
  • Compared to its closing price of one year ago, PXD's share price has jumped by 48.27%, exceeding the performance of the broader market during that same time frame. Although PXD had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • The current debt-to-equity ratio, 0.40, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that PXD's debt-to-equity ratio is low, the quick ratio, which is currently 0.66, displays a potential problem in covering short-term cash needs.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 4842.5% when compared to the same quarter one year ago, falling from $28.83 million to -$1,367.47 million.
  • 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, PIONEER NATURAL RESOURCES CO's return on equity significantly trails that of both the industry average and the S&P 500.

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