Trade-Ideas LLC identified

Denbury Resources

(

DNR

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

  • DNR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $20.1 million.
  • DNR has traded 2.6 million shares today.
  • DNR is down 3.4% today.
  • DNR was up 5.2% yesterday.

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More details on DNR:

Denbury Resources Inc. operates as an independent oil and natural gas company in the United States. The company primarily focuses on enhanced oil recovery utilizing carbon dioxide. The stock currently has a dividend yield of 8.9%. Currently there are no analysts that rate Denbury Resources a buy, 1 analyst rates it a sell, and 9 rate it a hold.

The average volume for Denbury Resources has been 11.7 million shares per day over the past 30 days. Denbury has a market cap of $1.0 billion and is part of the basic materials sector and energy industry. The stock has a beta of 3.47 and a short float of 25.3% with 11.36 days to cover. Shares are up 51% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Denbury Resources as a

sell

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

Highlights from the ratings report include:

  • The debt-to-equity ratio is very high at 3.01 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, DNR has a quick ratio of 0.59, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • 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, DENBURY RESOURCES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $2.03 million or 98.52% 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.
  • The share price of DENBURY RESOURCES INC has not done very well: it is down 24.40% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The change in net income from the same quarter one year ago has exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has significantly decreased by 71.9% when compared to the same quarter one year ago, falling from -$107.75 million to -$185.19 million.

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