Trade-Ideas LLC identified

Seadrill Partners

(

SDLP

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

  • SDLP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $7.8 million.
  • SDLP has traded 251,682 shares today.
  • SDLP is trading at 3.53 times the normal volume for the stock at this time of day.
  • SDLP is trading at a new low 6.23% 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 SDLP:

Seadrill Partners LLC owns, operates, and acquires offshore drilling units. The company primarily serves various oil and gas companies. As of March 31, 2015, its fleet consisted of four semi-submersible drilling rigs, three drillships, and three tender rigs. The stock currently has a dividend yield of 60.2%. SDLP has a PE ratio of 2. Currently there is 1 analyst that rates Seadrill Partners a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Seadrill Partners has been 833,800 shares per day over the past 30 days. Seadrill has a market cap of $283.8 million and is part of the basic materials sector and energy industry. The stock has a beta of 1.69 and a short float of 9.1% with 0.48 days to cover. Shares are down 77.3% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Seadrill Partners as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and weak operating cash flow.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 30.9%. Since the same quarter one year prior, revenues rose by 34.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to the other companies in the Energy Equipment & Services industry and the overall market, SEADRILL PARTNERS LLC's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • The gross profit margin for SEADRILL PARTNERS LLC is rather high; currently it is at 60.72%. Regardless of SDLP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.70% trails the industry average.
  • The debt-to-equity ratio is very high at 4.20 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, SDLP has a quick ratio of 0.67, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has decreased to $159.70 million or 34.81% 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.

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