Today's Perilous Reversal Stock: Denbury Resources (DNR)
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 Denbury Resources as such a stock due to the following factors:
- DNR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $83.6 million.
- DNR has traded 106,706 shares today.
- DNR is down 3.6% today.
- DNR was up 7.6% yesterday.
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More details on DNR:
Denbury Resources Inc. operates as an independent oil and natural gas company in the United States. The company primarily focuses on enhanced oil recovery utilizing carbon dioxide. The stock currently has a dividend yield of 3.4%. DNR has a PE ratio of 4.1. Currently there are 2 analysts that rate Denbury Resources a buy, 1 analyst rates it a sell, and 11 rate it a hold.
The average volume for Denbury Resources has been 12.7 million shares per day over the past 30 days. Denbury has a market cap of $2.6 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.65 and a short float of 11% with 3.50 days to cover. Shares are down 9.1% year-to-date as of the close of trading on Tuesday.
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Analysis:
rates Denbury Resources as a
. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow.
Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 304.1% when compared to the same quarter one year prior, rising from $89.99 million to $363.63 million.
- The debt-to-equity ratio is somewhat low, currently at 0.63, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that DNR's debt-to-equity ratio is low, the quick ratio, which is currently 0.57, displays a potential problem in covering short-term cash needs.
- Net operating cash flow has declined marginally to $337.73 million or 3.22% when compared to the same quarter last year. Despite a decrease in cash flow of 3.22%, DENBURY RESOURCES INC is in line with the industry average cash flow growth rate of -11.94%.
- DNR's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 52.39%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
- You can view the full Denbury Resources Ratings Report.
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