Perilous Reversal Stock: Sanchez Energy (SN)
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.
Trade-Ideas LLC identified
(
) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Sanchez Energy as such a stock due to the following factors:
- SN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $31.4 million.
- SN has traded 69,321 shares today.
- SN is down 4.9% today.
- SN was up 5.1% yesterday.
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More details on SN:
Sanchez Energy Corporation, an independent exploration and production company, focuses on the acquisition, exploration, and development of unconventional oil and natural gas resources in the onshore U.S. Gulf Coast. Currently there are 6 analysts that rate Sanchez Energy a buy, 1 analyst rates it a sell, and 2 rate it a hold.
The average volume for Sanchez Energy has been 3.2 million shares per day over the past 30 days. Sanchez Energy has a market cap of $723.9 million and is part of the basic materials sector and energy industry. The stock has a beta of 0.51 and a short float of 37.8% with 6.97 days to cover. Shares are up 36.8% year-to-date as of the close of trading on Wednesday.
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Analysis:
rates Sanchez Energy as a
. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and generally high debt management risk.
Highlights from the ratings report include:
- SANCHEZ ENERGY CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, SANCHEZ ENERGY CORP swung to a loss, reporting -$1.18 versus $0.18 in the prior year. For the next year, the market is expecting a contraction of 42.4% in earnings (-$1.68 versus -$1.18).
- 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 537.3% when compared to the same quarter one year ago, falling from $14.20 million to -$62.11 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, SANCHEZ ENERGY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 58.42%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 721.05% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- Currently the debt-to-equity ratio of 1.75 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Regardless of the company's weak debt-to-equity ratio, SN has managed to keep a strong quick ratio of 1.85, which demonstrates the ability to cover short-term cash needs.
- You can view the full Sanchez Energy Ratings Report.
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