Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.
Trade-Ideas LLC identified
) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Seadrill as such a stock due to the following factors:
- SDRL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $74.1 million.
- SDRL has traded 2.3 million shares today.
- SDRL traded in a range 225.8% of the normal price range with a price range of $1.76.
- SDRL traded below its daily resistance level (quality: 94 days, meaning that the stock is crossing a resistance level set by the last 94 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).
Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.
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More details on SDRL:
Seadrill Limited provides offshore drilling services to the oil and gas industry worldwide. The company operates in three segments: Floaters, Jack-up Rigs, and Tender Rigs. The stock currently has a dividend yield of 8.1%. SDRL has a PE ratio of 9.5. Currently there are 5 analysts that rate Seadrill a buy, 1 analyst rates it a sell, and 6 rate it a hold.
The average volume for Seadrill has been 2.0 million shares per day over the past 30 days. Seadrill has a market cap of $21.2 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.34 and a short float of 3.5% with 7.08 days to cover. Shares are up 22.7% year to date as of the close of trading on Friday.
rates Seadrill as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, compelling growth in net income, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
Highlights from the ratings report include:
- SDRL's revenue growth has slightly outpaced the industry average of 9.5%. Since the same quarter one year prior, revenues rose by 13.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Energy Equipment & Services industry and the overall market, SEADRILL LTD's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Energy Equipment & Services industry. The net income increased by 228.9% when compared to the same quarter one year prior, rising from $525.00 million to $1,727.00 million.
- The gross profit margin for SEADRILL LTD is rather high; currently it is at 57.49%. Regardless of SDRL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SDRL's net profit margin of 136.19% significantly outperformed against the industry.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- You can view the full Seadrill Ratings Report.