Today's Dead Cat Bounce Stock Is Seadrill (SDRL)
Trade-Ideas LLC identified
(
) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Seadrill as such a stock due to the following factors:
- SDRL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $37.2 million.
- SDRL has traded 280,157 shares today.
- SDRL is up 3.3% today.
- SDRL was down 5.3% yesterday.
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More details on SDRL:
Seadrill Limited, an offshore drilling contractor, provides offshore drilling services to the oil and gas industry worldwide. The company operates through Floaters and Jack-up Rigs segments. Currently there are no analysts that rate Seadrill a buy, 3 analysts rate it a sell, and 4 rate it a hold.
The average volume for Seadrill has been 13.2 million shares per day over the past 30 days. Seadrill has a market cap of $1.7 billion and is part of the basic materials sector and energy industry. The stock has a beta of 2.81 and a short float of 17.3% with 5.35 days to cover. Shares are down 6.2% year-to-date as of the close of trading on Wednesday.
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Analysis:
rates Seadrill as a
. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
Highlights from the ratings report include:
- The debt-to-equity ratio of 1.16 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, SDRL has a quick ratio of 0.68, 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 Energy Equipment & Services industry and the overall market, SEADRILL LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $294.00 million or 40.24% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, SEADRILL LTD has marginally lower results.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 68.67%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 82.55% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- SEADRILL LTD 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, SEADRILL LTD swung to a loss, reporting -$1.49 versus $8.10 in the prior year. This year, the market expects an improvement in earnings ($1.22 versus -$1.49).
- You can view the full Seadrill Ratings Report.
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