Trade-Ideas LLC identified

Laredo Petroleum

(

LPI

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

  • LPI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $28.3 million.
  • LPI has traded 596,426 shares today.
  • LPI is down 3.5% today.
  • LPI was up 5.2% yesterday.

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More details on LPI:

Laredo Petroleum, Inc. operates as an independent energy company in the United States. It focuses on the acquisition, exploration, and development of oil and natural gas properties primarily in the Permian Basin in west Texas. Currently there are 4 analysts that rate Laredo Petroleum a buy, 2 analysts rate it a sell, and 10 rate it a hold.

TST Recommends

The average volume for Laredo Petroleum has been 3.2 million shares per day over the past 30 days. Laredo has a market cap of $1.5 billion and is part of the basic materials sector and energy industry. The stock has a beta of 0.58 and a short float of 18.5% with 6.00 days to cover. Shares are down 8% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Laredo Petroleum as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • 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 1116.4% when compared to the same quarter one year ago, falling from $83.41 million to -$847.78 million.
  • The debt-to-equity ratio of 1.30 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, LPI has a quick ratio of 0.61, 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 Oil, Gas & Consumable Fuels industry and the overall market, LAREDO PETROLEUM INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $111.20 million or 18.37% when compared to the same quarter last year. Despite a decrease in cash flow of 18.37%, LAREDO PETROLEUM INC is in line with the industry average cash flow growth rate of -26.59%.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 31.21%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 791.37% 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.

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