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Magnum Hunter Resources Corporation (MHR) Is Today's Dead Cat Bounce 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 Magnum Hunter Resources Corporation ( MHR) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Magnum Hunter Resources Corporation as such a stock due to the following factors:

  • MHR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $33.2 million.
  • MHR has traded 185,564 shares today.
  • MHR is up 3.6% today.
  • MHR was down 5.4% yesterday.

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More details on MHR:

Magnum Hunter Resources Corporation, an independent oil and natural gas company, explores for, exploits, acquires, develops, and produces crude oil, natural gas, and natural gas liquid resources in the United States. Currently there are 6 analysts that rate Magnum Hunter Resources Corporation a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Magnum Hunter Resources Corporation has been 4.2 million shares per day over the past 30 days. Magnum Hunter has a market cap of $1.5 billion and is part of the basic materials sector and energy industry. The stock has a beta of 2.61 and a short float of 16.5% with 6.67 days to cover. Shares are up 15.7% year-to-date as of the close of trading on Monday.

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 Magnum Hunter Resources Corporation as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:

  • MHR's very impressive revenue growth greatly exceeded the industry average of 3.2%. Since the same quarter one year prior, revenues leaped by 91.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 31.81% and other important driving factors, this stock has surged by 122.01% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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.
  • MAGNUM HUNTER RESOURCES CORP has improved earnings per share by 31.8% 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, MAGNUM HUNTER RESOURCES CORP reported poor results of -$1.53 versus -$0.96 in the prior year. This year, the market expects an improvement in earnings (-$0.61 versus -$1.53).
  • The debt-to-equity ratio of 1.40 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, MHR has a quick ratio of 0.57, this demonstrates the lack of ability of the company to cover short-term liquidity 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, MAGNUM HUNTER RESOURCES CORP's return on equity significantly trails that of both the industry average and the S&P 500.

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