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

Southwestern Energy

(

SWN

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

  • SWN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $184.5 million.
  • SWN has traded 714,101 shares today.
  • SWN is trading at 3.21 times the normal volume for the stock at this time of day.
  • SWN is trading at a new low 3.06% 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 SWN:

Southwestern Energy Company explores, develops, and produces natural gas and oil in the United States. The company operates in two segments, Exploration, Development and Production; and Midstream Services. SWN has a PE ratio of 8. Currently there are 10 analysts that rate Southwestern Energy a buy, 1 analyst rates it a sell, and 13 rate it a hold.

The average volume for Southwestern Energy has been 7.7 million shares per day over the past 30 days. Southwestern Energy has a market cap of $7.1 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.21 and a short float of 12.9% with 4.17 days to cover. Shares are down 32.8% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Southwestern Energy as a

hold

. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:

  • The debt-to-equity ratio is somewhat low, currently at 0.73, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that SWN's debt-to-equity ratio is low, the quick ratio, which is currently 0.54, displays a potential problem in covering short-term cash needs.
  • 49.09% is the gross profit margin for SOUTHWESTERN ENERGY CO which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, SWN's net profit margin of 8.36% compares favorably to the industry average.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, SOUTHWESTERN ENERGY CO's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • 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 59.8% when compared to the same quarter one year ago, falling from $194.19 million to $78.00 million.

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