Trade-Ideas LLC identified

Rowan Companies

(

RDC

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

  • RDC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $58.6 million.
  • RDC has traded 257,087 shares today.
  • RDC is down 3.2% today.
  • RDC was up 5.7% yesterday.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in RDC with the Ticky from Trade-Ideas. See the FREE profile for RDC NOW at Trade-Ideas

More details on RDC:

Rowan Companies plc provides offshore oil and gas contract drilling services. It operates a fleet of 31 mobile offshore drilling units, including 27 self-elevating jack-up rigs and 4 ultra-deepwater drillships. The stock currently has a dividend yield of 2.4%. RDC has a PE ratio of 5. Currently there are 6 analysts that rate Rowan Companies a buy, 1 analyst rates it a sell, and 11 rate it a hold.

The average volume for Rowan Companies has been 4.3 million shares per day over the past 30 days. Rowan Companies has a market cap of $2.1 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.66 and a short float of 22.7% with 5.85 days to cover. Shares are up 2.5% year-to-date as of the close of trading on Wednesday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Rowan Companies as a

hold

. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, 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 current debt-to-equity ratio, 0.55, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 3.42, which clearly demonstrates the ability to cover short-term cash needs.
  • 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. Compared to other companies in the Energy Equipment & Services industry and the overall market on the basis of return on equity, ROWAN COMPANIES PLC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, RDC has underperformed the S&P 500 Index, declining 24.93% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • Net operating cash flow has decreased to $160.05 million or 34.61% when compared to the same quarter last year. Despite a decrease in cash flow of 34.61%, ROWAN COMPANIES PLC is in line with the industry average cash flow growth rate of -36.08%.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.