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Trade-Ideas LLC identified
) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Approach Resources as such a stock due to the following factors:
- AREX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $17.7 million.
- AREX has traded 85,650 shares today.
- AREX is down 3.3% today.
- AREX was up 8.9% yesterday.
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More details on AREX:
Approach Resources Inc., an independent energy company, is engaged in the acquisition, development, exploration, and production of oil and gas properties in the United States. AREX has a PE ratio of 4.4. Currently there are 6 analysts that rate Approach Resources a buy, 1 analyst rates it a sell, and 8 rate it a hold.
The average volume for Approach Resources has been 1.4 million shares per day over the past 30 days. Approach has a market cap of $420.1 million and is part of the basic materials sector and energy industry. The stock has a beta of 1.59 and a short float of 27.5% with 5.79 days to cover. Shares are down 39.2% year-to-date as of the close of trading on Thursday.
rates Approach Resources as a
. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- AREX's very impressive revenue growth greatly exceeded the industry average of 6.5%. Since the same quarter one year prior, revenues leaped by 54.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.46, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.22 is very weak and demonstrates a lack of ability to pay short-term obligations.
- AREX'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 48.54%, 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.
- Net operating cash flow has decreased to $62.54 million or 15.66% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full Approach Resources Ratings Report.