Today's Perilous Reversal Stock: Quicksilver Resources (KWK)

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

  • KWK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $15.5 million.
  • KWK has traded 112,443 shares today.
  • KWK is down 3.2% today.
  • KWK was up 14.3% yesterday.

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More details on KWK:

Quicksilver Resources Inc., an independent oil and gas company, is engaged in the acquisition, exploration, development, production, and sale of natural gas, natural gas liquids, and oil in North America. KWK has a PE ratio of 2.6. Currently there are 2 analysts that rate Quicksilver Resources a buy, 3 analysts rate it a sell, and 7 rate it a hold.

The average volume for Quicksilver Resources has been 3.8 million shares per day over the past 30 days. Quicksilver has a market cap of $432.3 million and is part of the basic materials sector and energy industry. The stock has a beta of 1.32 and a short float of 64.2% with 7.54 days to cover. Shares are down 9.1% year-to-date as of the close of trading on Friday.

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 Quicksilver Resources as a sell. The company's weaknesses can be seen in multiple areas, such as its poor profit margins, weak operating cash flow and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • The gross profit margin for QUICKSILVER RESOURCES INC is rather low; currently it is at 19.85%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -64.09% is significantly below that of the industry average.
  • Net operating cash flow has decreased to -$19.98 million or 38.83% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • QUICKSILVER RESOURCES INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, QUICKSILVER RESOURCES INC turned its bottom line around by earning $0.90 versus -$13.83 in the prior year. For the next year, the market is expecting a contraction of 131.1% in earnings (-$0.28 versus $0.90).
  • KWK, with its decline in revenue, underperformed when compared the industry average of 3.1%. Since the same quarter one year prior, revenues fell by 22.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The stock price has risen over the past year, but it has underperformed the S&P 500 so far. 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.

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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