Magnum Hunter Resources Corportion (MHR) Falls Further As It's Water-Logged And Getting Wetter

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 Magnum Hunter Resources Corportion ( MHR) 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 Magnum Hunter Resources Corportion as such a stock due to the following factors:

  • MHR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $40.7 million.
  • MHR has traded 5.5 million shares today.
  • MHR traded in a range 214.6% of the normal price range with a price range of $0.81.
  • MHR traded below its daily resistance level (quality: 11 days, meaning that the stock is crossing a resistance level set by the last 11 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 MHR:

Magnum Hunter Resources Corporation, an independent oil and gas company, engages in the exploration, exploitation, acquisition, development, and production of crude oil, natural gas, and natural gas liquid resources in the United States and Canada. The stock currently has a dividend yield of 0%. Currently there are 7 analysts that rate Magnum Hunter Resources Corportion a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Magnum Hunter Resources Corportion has been 3.4 million shares per day over the past 30 days. Magnum Hunter Resources Corportion has a market cap of $937.6 million and is part of the basic materials sector and energy industry. The stock has a beta of 2.82 and a short float of 22.5% with 6.16 days to cover. Shares are up 38.3% year to date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Magnum Hunter Resources Corportion as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and poor profit margins.

Highlights from the ratings report include:
  • MHR's very impressive revenue growth greatly exceeded the industry average of 6.5%. Since the same quarter one year prior, revenues leaped by 97.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 64.19% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • MAGNUM HUNTER RESOURCES CORP has improved earnings per share by 21.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MAGNUM HUNTER RESOURCES CORP reported poor results of -$1.16 versus -$0.82 in the prior year. This year, the market expects an improvement in earnings (-$0.58 versus -$1.16).
  • Net operating cash flow has significantly decreased to -$3.75 million or 114.94% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, MAGNUM HUNTER RESOURCES CORP's return on equity significantly trails that of both the industry average and the S&P 500.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.
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