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Trade-Ideas LLC identified

Rowan Companies

(

RDC

) as a weak on high relative volume 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 $63.3 million.
  • RDC has traded 1.5 million shares today.
  • RDC is trading at 10.40 times the normal volume for the stock at this time of day.
  • RDC is trading at a new low 6.01% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on RDC:

TheStreet Recommends

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 3.4%. RDC has a PE ratio of 21. Currently there are 7 analysts that rate Rowan Companies a buy, 1 analyst rates it a sell, and 10 rate it a hold.

The average volume for Rowan Companies has been 4.8 million shares per day over the past 30 days. Rowan Companies has a market cap of $2.0 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 22.3% with 5.36 days to cover. Shares are down 6.8% year-to-date as of the close of trading on Wednesday.

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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 impressive record of earnings per share growth, compelling growth in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:

  • ROWAN COMPANIES PLC reported significant earnings per share improvement 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ROWAN COMPANIES PLC turned its bottom line around by earning $0.74 versus -$0.96 in the prior year. This year, the market expects an improvement in earnings ($2.42 versus $0.74).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Energy Equipment & Services industry. The net income increased by 138.0% when compared to the same quarter one year prior, rising from -$326.89 million to $124.35 million.
  • Despite the weak revenue results, RDC has significantly outperformed against the industry average of 38.2%. Since the same quarter one year prior, revenues slightly dropped by 3.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • 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 underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • RDC has underperformed the S&P 500 Index, declining 22.24% 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.

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