Seadrill Partners (SDLP) Weak On High Volume Today - TheStreet

Trade-Ideas LLC identified

Seadrill Partners

(

SDLP

) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Seadrill Partners as such a stock due to the following factors:

  • SDLP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.2 million.
  • SDLP has traded 94,387 shares today.
  • SDLP is trading at 2.23 times the normal volume for the stock at this time of day.
  • SDLP is trading at a new low 4.02% 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 SDLP:

Seadrill Partners LLC owns, operates, and acquires offshore drilling units. The company primarily serves various oil and gas companies. As of March 31, 2015, its fleet consisted of four semi-submersible drilling rigs, three drillships, and three tender rigs. The stock currently has a dividend yield of 23.3%. SDLP has a PE ratio of 5. Currently there are 3 analysts that rate Seadrill Partners a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Seadrill Partners has been 344,700 shares per day over the past 30 days. Seadrill has a market cap of $734.0 million and is part of the basic materials sector and energy industry. The stock has a beta of 1.61 and a short float of 9.1% with 2.90 days to cover. Shares are down 41.7% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Seadrill Partners as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 30.8%. Since the same quarter one year prior, revenues rose by 20.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Energy Equipment & Services industry and the overall market, SEADRILL PARTNERS LLC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • SEADRILL PARTNERS LLC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SEADRILL PARTNERS LLC reported lower earnings of $1.72 versus $1.86 in the prior year. This year, the market expects an improvement in earnings ($3.04 versus $1.72).
  • SDLP's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 51.00%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • The debt-to-equity ratio is very high at 4.08 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, SDLP has a quick ratio of 0.65, this demonstrates the lack of ability of the company to cover short-term liquidity needs.

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