Today's Dead Cat Bounce Stock Is Sanchez Energy (SN)

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 Sanchez Energy ( SN) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Sanchez Energy as such a stock due to the following factors:

  • SN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $33.5 million.
  • SN has traded 141,780 shares today.
  • SN is up 3.2% today.
  • SN was down 5.1% yesterday.

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More details on SN:

Sanchez Energy Corporation, an independent exploration and production company, focuses on the acquisition, exploration, and development of unconventional oil and natural gas resources in the onshore U.S. Gulf Coast. Currently there are 10 analysts that rate Sanchez Energy a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Sanchez Energy has been 1.5 million shares per day over the past 30 days. Sanchez Energy has a market cap of $1.7 billion and is part of the basic materials sector and energy industry. The stock has a beta of 0.70 and a short float of 17.3% with 6.48 days to cover. Shares are up 22.8% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Sanchez Energy as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, compelling growth in net income, good cash flow from operations and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • SN's very impressive revenue growth greatly exceeded the industry average of 1.5%. Since the same quarter one year prior, revenues leaped by 333.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, SN's share price has jumped by 34.12%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SN should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 4755.4% when compared to the same quarter one year prior, rising from -$0.07 million to $3.45 million.
  • Net operating cash flow has significantly increased by 62.08% to $64.58 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 18.80%.
  • SANCHEZ ENERGY CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, SANCHEZ ENERGY CORP turned its bottom line around by earning $0.18 versus -$0.55 in the prior year. This year, the market expects an improvement in earnings ($1.33 versus $0.18).

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