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 EXCO Resources ( XCO) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified EXCO Resources as such a stock due to the following factors:
- XCO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $23.9 million.
- XCO has traded 298,837 shares today.
- XCO is down 3.1% today.
- XCO was up 7.4% yesterday.
EXCLUSIVE OFFER: Get the inside scoop on opportunities in XCO with the Ticky from Trade-Ideas. See the FREE profile for XCO NOW at Trade-Ideas More details on XCO: EXCO Resources, Inc., an independent oil and natural gas company, engages in the acquisition, exploration, exploitation, development and production of onshore U.S. oil and natural gas properties with a focus on shale resource plays. The stock currently has a dividend yield of 3.9%. Currently there are no analysts that rate EXCO Resources a buy, 1 analyst rates it a sell, and 6 rate it a hold. The average volume for EXCO Resources has been 3.7 million shares per day over the past 30 days. EXCO has a market cap of $1.1 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.13 and a short float of 22.3% with 6.14 days to cover. Shares are down 18.3% year to date as of the close of trading on Thursday. 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 EXCO Resources 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 7.66 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 0.44, which clearly demonstrates the inability to cover short-term cash needs.
- Net operating cash flow has significantly decreased to $52.14 million or 61.17% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- XCO's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 30.40%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- 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 Oil, Gas & Consumable Fuels industry and the overall market, EXCO RESOURCES INC's return on equity significantly trails that of both the industry average and the S&P 500.
- EXCO RESOURCES INC reported significant earnings per share improvement 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, EXCO RESOURCES INC swung to a loss, reporting -$6.51 versus $0.09 in the prior year. This year, the market expects an improvement in earnings ($0.42 versus -$6.51).
- You can view the full EXCO Resources Ratings Report.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.