Perilous Reversal Stock: PDC Energy (PDCE)

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

  • PDCE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $85.6 million.
  • PDCE has traded 500,096 shares today.
  • PDCE is down 3% today.
  • PDCE was up 9% yesterday.

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More details on PDCE:

PDC Energy, Inc., an independent exploration and production company, acquires, explores for, develops, and produces crude oil, natural gas, and natural gas liquids in the United States. PDCE has a PE ratio of 118.9. Currently there are 13 analysts that rate PDC Energy a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for PDC Energy has been 856,800 shares per day over the past 30 days. PDC Energy has a market cap of $2.0 billion and is part of the basic materials sector and energy industry. The stock has a beta of 2.66 and a short float of 15.3% with 2.51 days to cover. Shares are up 5% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates PDC Energy as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we find that the stock has experienced relatively poor performance when compared with the S&P 500 during the past year.

Highlights from the ratings report include:
  • PDCE's very impressive revenue growth greatly exceeded the industry average of 2.1%. Since the same quarter one year prior, revenues leaped by 81.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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 94.6% when compared to the same quarter one year prior, rising from -$39.42 million to -$2.13 million.
  • PDC ENERGY 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, PDC ENERGY INC reported poor results of -$0.92 versus -$0.58 in the prior year. This year, the market expects an improvement in earnings ($1.44 versus -$0.92).
  • 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, PDC ENERGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • 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. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.

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