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Trade-Ideas LLC identified

SM Energy

(

SM

) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified SM Energy as such a stock due to the following factors:

  • SM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $57.0 million.
  • SM has traded 1.8 million shares today.
  • SM is up 3.2% today.
  • SM was down 7.3% yesterday.

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More details on SM:

SM Energy Company, an independent energy company, engages in the acquisition, exploration, development, and production of crude oil and condensate, natural gas, and natural gas liquids in onshore North America. The stock currently has a dividend yield of 0.3%. SM has a PE ratio of 9. Currently there are 12 analysts that rate SM Energy a buy, no analysts rate it a sell, and 4 rate it a hold.

TheStreet Recommends

The average volume for SM Energy has been 2.2 million shares per day over the past 30 days. SM Energy 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 1.31 and a short float of 17.3% with 6.02 days to cover. Shares are down 25% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates SM Energy as a

hold

. Among the primary strengths of the company is its reasonable valuation levels, considering its current price compared to earnings, book value and other measures. At the same time, however, we also find weaknesses including deteriorating net income, generally higher debt management risk and weak operating cash flow.

Highlights from the ratings report include:

  • SM, with its decline in revenue, slightly underperformed the industry average of 36.8%. Since the same quarter one year prior, revenues fell by 40.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • SM ENERGY CO 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, SM ENERGY CO increased its bottom line by earning $9.80 versus $2.52 in the prior year. For the next year, the market is expecting a contraction of 100.1% in earnings (-$0.01 versus $9.80).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 98.5% when compared to the same quarter one year ago, falling from $208.94 million to $3.11 million.
  • The debt-to-equity ratio of 1.16 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.35, which clearly demonstrates the inability to cover short-term cash needs.

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