Trade-Ideas LLC identified

Memorial Resource Development

(

MRD

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

  • MRD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $31.0 million.
  • MRD has traded 765,857 shares today.
  • MRD is down 3.1% today.
  • MRD was up 5.8% yesterday.

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More details on MRD:

Memorial Resource Development Corp., an independent natural gas and oil company, focuses on the acquisition, exploitation, and development of natural gas, natural gas liquids, and oil properties primarily in North Louisiana. MRD has a PE ratio of 11. Currently there are 13 analysts that rate Memorial Resource Development a buy, no analysts rate it a sell, and 1 rates it a hold.

TheStreet Recommends

The average volume for Memorial Resource Development has been 1.7 million shares per day over the past 30 days. Memorial Resource Development has a market cap of $3.0 billion and is part of the basic materials sector and energy industry. Shares are down 5.5% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Memorial Resource Development as a

sell

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

Highlights from the ratings report include:

  • The debt-to-equity ratio is very high at 3.26 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.40, which clearly demonstrates the inability to cover short-term cash needs.
  • Net operating cash flow has decreased to $136.63 million or 27.21% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, MEMORIAL RESOURCE DEV CORP has marginally lower results.
  • MRD has underperformed the S&P 500 Index, declining 21.48% from its price level of one year ago. 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.
  • Despite the weak revenue results, MRD has outperformed against the industry average of 36.5%. Since the same quarter one year prior, revenues fell by 24.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • MEMORIAL RESOURCE DEV CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($0.38 versus -$3.97).

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