Trade-Ideas LLC identified

Baytex Energy

(

BTE

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

  • BTE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $20.0 million.
  • BTE has traded 410,615 shares today.
  • BTE is down 3% today.
  • BTE was up 6.7% yesterday.

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More details on BTE:

Baytex Energy Corp., an oil and gas company, engages in the acquisition, development, exploitation, and production of oil and natural gas in the Western Canadian Sedimentary Basin and the United States. It offers heavy oil, light oil, condensate, and natural gas liquids. The stock currently has a dividend yield of 28.5%. Currently there are 2 analysts that rate Baytex Energy a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Baytex Energy has been 3.1 million shares per day over the past 30 days. Baytex Energy has a market cap of $1.2 billion and is part of the basic materials sector and energy industry. Shares are up 81.8% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Baytex Energy as a

sell

. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins, weak operating cash flow, generally disappointing historical performance in the stock itself and generally high debt management risk.

Highlights from the ratings report include:

  • 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 Oil, Gas & Consumable Fuels industry and the overall market, BAYTEX ENERGY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for BAYTEX ENERGY CORP is currently lower than what is desirable, coming in at 30.05%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 0.51% trails that of the industry average.
  • Net operating cash flow has significantly decreased to $64.35 million or 69.28% 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.
  • BTE'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 64.06%, 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. 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.
  • BTE's debt-to-equity ratio of 0.80 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.34 is very low and demonstrates very weak liquidity.

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