Perilous Reversal Watch: Bill Barrett Corporation (BBG)

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

  • BBG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $30.7 million.
  • BBG has traded 96,139 shares today.
  • BBG is down 3.6% today.
  • BBG was up 6.7% yesterday.

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More details on BBG:

Bill Barrett Corporation, an independent energy company, acquires, explores for, and develops oil and natural gas resources in the United States. Currently there are 7 analysts that rate Bill Barrett Corporation a buy, 2 analysts rate it a sell, and 8 rate it a hold.

The average volume for Bill Barrett Corporation has been 1.1 million shares per day over the past 30 days. Bill Barrett has a market cap of $1.0 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.63 and a short float of 19.6% with 4.90 days to cover. Shares are down 16.1% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Bill Barrett Corporation as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:
  • BBG's revenue growth has slightly outpaced the industry average of 1.5%. Since the same quarter one year prior, revenues slightly increased by 2.4%. 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 where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • BILL BARRETT 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, BILL BARRETT CORP swung to a loss, reporting -$4.06 versus $0.01 in the prior year. This year, the market expects an improvement in earnings ($0.34 versus -$4.06).
  • 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, BILL BARRETT CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has declined marginally to $52.22 million or 6.91% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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