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

Seventy Seven Energy

(

SSE

) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Seventy Seven Energy as such a stock due to the following factors:

  • SSE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.7 million.
  • SSE has traded 162,458 shares today.
  • SSE is trading at 2.22 times the normal volume for the stock at this time of day.
  • SSE is trading at a new high 3.29% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into 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. 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 SSE:

Seventy Seven Energy Inc. provides oilfield services in the United States. The company operates in four segments: Drilling, Hydraulic Fracturing, Oilfield Rentals, and Oilfield Trucking. Currently there are 4 analysts that rate Seventy Seven Energy a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Seventy Seven Energy has been 1.5 million shares per day over the past 30 days. Seventy Seven Energy has a market cap of $174.2 million and is part of the basic materials sector and energy industry. Shares are down 38.3% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Seventy Seven Energy as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, generally high debt management risk 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 Energy Equipment & Services industry. The net income has significantly decreased by 443.9% when compared to the same quarter one year ago, falling from $21.71 million to -$74.67 million.
  • 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 Energy Equipment & Services industry and the overall market, SEVENTY SEVEN ENERGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for SEVENTY SEVEN ENERGY INC is rather low; currently it is at 18.98%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -25.30% is significantly below that of the industry average.
  • Although SSE's debt-to-equity ratio of 7.76 is very high, it is currently less than that of the industry average. Regardless of the company's weak debt-to-equity ratio, SSE has managed to keep a strong quick ratio of 1.91, which demonstrates the ability to cover short-term cash needs.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 86.89%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 426.08% 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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