SandRidge Energy (SD) 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 SandRidge Energy ( SD) 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 SandRidge Energy as such a stock due to the following factors:

  • SD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $60.2 million.
  • SD has traded 14.8 million shares today.
  • SD traded in a range 238.6% of the normal price range with a price range of $0.60.
  • SD traded below its daily resistance level (quality: 26 days, meaning that the stock is crossing a resistance level set by the last 26 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 SD:

SandRidge Energy, Inc., together with its subsidiaries, operates as an independent natural gas and oil company in the United States. It operates in three segments: Exploration and Production, Drilling and Oil Field Services, and Midstream Services. Currently there are 2 analysts that rate SandRidge Energy a buy, 2 analysts rate it a sell, and 14 rate it a hold.

The average volume for SandRidge Energy has been 9.7 million shares per day over the past 30 days. SandRidge Energy has a market cap of $3.1 billion and is part of the basic materials sector and energy industry. The stock has a beta of 3.29 and a short float of 12.4% with 4.85 days to cover. Shares are up 0.5% year to date as of the close of trading on Monday.

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

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates SandRidge Energy as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity and generally high debt management risk.

Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 102.5% when compared to the same quarter one year ago, falling from $818.07 million to -$20.44 million.
  • 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, SANDRIDGE ENERGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Currently the debt-to-equity ratio of 1.69 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Regardless of the company's weak debt-to-equity ratio, SD has managed to keep a strong quick ratio of 1.70, which demonstrates the ability to cover short-term cash needs.
  • In its most recent trading session, SD has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
  • The gross profit margin for SANDRIDGE ENERGY INC is rather high; currently it is at 62.47%. Regardless of SD'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 -3.98% trails the industry average.

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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