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

Comstock Resources

(

CRK

) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Comstock Resources as such a stock due to the following factors:

  • CRK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $13.1 million.
  • CRK has traded 1.5 million shares today.
  • CRK is down 3.1% today.
  • CRK was up 7.6% yesterday.

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More details on CRK:

Comstock Resources, Inc., an independent energy company, acquires, develops, explores, and produces oil and natural gas properties in the United States. Its oil and gas operations are primarily located in East Texas/North Louisiana and South Texas. The stock currently has a dividend yield of 14.7%. Currently there are 4 analysts that rate Comstock Resources a buy, 2 analysts rate it a sell, and 7 rate it a hold.

The average volume for Comstock Resources has been 3.0 million shares per day over the past 30 days. Comstock has a market cap of $162.4 million and is part of the basic materials sector and energy industry. The stock has a beta of 2.92 and a short float of 33.5% with 4.57 days to cover. Shares are down 46.1% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Comstock Resources as a

sell

. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, poor profit margins, generally disappointing historical performance in the stock itself, deteriorating net income and feeble growth in its earnings per share.

Highlights from the ratings report include:

  • The debt-to-equity ratio of 1.23 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.36, which clearly demonstrates the inability to cover short-term cash needs.
  • The gross profit margin for COMSTOCK RESOURCES INC is currently lower than what is desirable, coming in at 25.77%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -48.89% is significantly below that of the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 82.90%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 48.75% 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.
  • The change in net income from the same quarter one year ago has exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has significantly decreased by 46.9% when compared to the same quarter one year ago, falling from -$37.50 million to -$55.07 million.
  • COMSTOCK RESOURCES INC's earnings per share declined by 48.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, COMSTOCK RESOURCES INC continued to lose money by earning -$1.24 versus -$2.29 in the prior year. For the next year, the market is expecting a contraction of 246.4% in earnings (-$4.30 versus -$1.24).

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