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

Continental Resources

(

CLR

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

  • CLR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $134.2 million.
  • CLR has traded 408,831 shares today.
  • CLR is down 3.3% today.
  • CLR was up 5.3% yesterday.

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More details on CLR:

Continental Resources, Inc. explores, develops, and produces crude oil and natural gas properties in the north, south, and east regions of the United States. CLR has a PE ratio of 2. Currently there are 9 analysts that rate Continental Resources a buy, 2 analysts rate it a sell, and 10 rate it a hold.

The average volume for Continental Resources has been 3.2 million shares per day over the past 30 days. Continental has a market cap of $12.4 billion and is part of the basic materials sector and energy industry. The stock has a beta of 0.78 and a short float of 18% with 3.91 days to cover. Shares are down 8.5% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Continental Resources as a

hold

. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:

  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 38.8%. Since the same quarter one year prior, revenues fell by 35.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for CONTINENTAL RESOURCES INC is rather high; currently it is at 65.60%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, CLR's net profit margin of -21.09% significantly underperformed when compared to the industry average.
  • CONTINENTAL RESOURCES INC 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. 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, CONTINENTAL RESOURCES INC increased its bottom line by earning $2.64 versus $2.07 in the prior year. For the next year, the market is expecting a contraction of 97.3% in earnings ($0.07 versus $2.64).
  • The debt-to-equity ratio of 1.40 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, CLR has a quick ratio of 0.63, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CONTINENTAL 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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