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

Concho Resources

(

CXO

) as a pre-market laggard candidate. In addition to specific proprietary factors, Trade-Ideas identified Concho Resources as such a stock due to the following factors:

  • CXO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $171.5 million.
  • CXO traded 25,232 shares today in the pre-market hours as of 7:59 AM.
  • CXO is down 3.7% today from yesterday's close.

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More details on CXO:

Concho Resources Inc., an independent oil and natural gas company, acquires, develops, and explores for oil and natural gas properties in the Unites States. The company's principal operating areas are located in the Permian Basin region of southeast New Mexico and West Texas. CXO has a PE ratio of 23.9. Currently there are 19 analysts that rate Concho Resources a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Concho Resources has been 2.1 million shares per day over the past 30 days. Concho has a market cap of $12.8 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.24 and a short float of 7% with 2.98 days to cover. Shares are up 17.1% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Concho Resources as a

buy

. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Oil, Gas & Consumable Fuels industry average. The net income increased by 22.8% when compared to the same quarter one year prior, going from $105.79 million to $129.90 million.
  • The debt-to-equity ratio is somewhat low, currently at 0.68, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.46 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • Despite the weak revenue results, CXO has outperformed against the industry average of 18.9%. Since the same quarter one year prior, revenues slightly dropped by 6.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • CONCHO RESOURCES INC has improved earnings per share by 13.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, CONCHO RESOURCES INC increased its bottom line by earning $4.82 versus $2.28 in the prior year. For the next year, the market is expecting a contraction of 79.9% in earnings ($0.97 versus $4.82).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CONCHO RESOURCES INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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