Core Laboratories (CLB) Showing Signs Of Being 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 Core Laboratories ( CLB) 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 Core Laboratories as such a stock due to the following factors:

  • CLB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $47.3 million.
  • CLB has traded 513,280 shares today.
  • CLB traded in a range 207.7% of the normal price range with a price range of $10.59.
  • CLB traded below its daily resistance level (quality: 247 days, meaning that the stock is crossing a resistance level set by the last 247 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 CLB:

Core Laboratories N.V. provides reservoir description, production enhancement, and reservoir management services to the oil and gas industry in the Netherlands and internationally. The company operates in three segments: Reservoir Description, Production Enhancement, and Reservoir Management. The stock currently has a dividend yield of 1.1%. CLB has a PE ratio of 35.0. Currently there are 2 analysts that rate Core Laboratories a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Core Laboratories has been 305,400 shares per day over the past 30 days. Core has a market cap of $8.5 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.21 and a short float of 2.8% with 4.20 days to cover. Shares are down 1% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Core Laboratories as a buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth, notable return on equity, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:
  • CORE LABORATORIES NV has improved earnings per share by 10.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CORE LABORATORIES NV increased its bottom line by earning $5.28 versus $4.55 in the prior year. This year, the market expects an improvement in earnings ($6.20 versus $5.28).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.6%. Since the same quarter one year prior, revenues slightly increased by 0.8%. 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, CORE LABORATORIES NV's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • 38.51% is the gross profit margin for CORE LABORATORIES NV which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 23.22% significantly outperformed against the industry average.
  • 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 29.19% over the past year, a rise that has exceeded that of the S&P 500 Index. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.

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