Today's Perilous Reversal Stock: Goodrich Petroleum (GDP)

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

  • GDP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $34.2 million.
  • GDP has traded 141,283 shares today.
  • GDP is down 3.1% today.
  • GDP was up 7.4% yesterday.

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More details on GDP:

Goodrich Petroleum Corporation, an independent oil and natural gas company, is engaged in the exploration, development, and production of oil and natural gas. Currently there are 11 analysts that rate Goodrich Petroleum a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for Goodrich Petroleum has been 1.5 million shares per day over the past 30 days. Goodrich has a market cap of $750.4 million and is part of the basic materials sector and energy industry. The stock has a beta of 2.42 and a short float of 48% with 5.68 days to cover. Shares are up 6.6% 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 Goodrich Petroleum as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 2.6%. Since the same quarter one year prior, revenues slightly increased by 10.0%. 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.
  • The gross profit margin for GOODRICH PETROLEUM CORP is currently very high, coming in at 78.18%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -47.08% is in-line with the industry average.
  • GOODRICH PETROLEUM CORP's earnings per share declined by 32.7% in the most recent quarter compared to 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, GOODRICH PETROLEUM CORP reported poor results of -$2.99 versus -$2.48 in the prior year. This year, the market expects an improvement in earnings (-$1.65 versus -$2.99).
  • The share price of GOODRICH PETROLEUM CORP has not done very well: it is down 20.34% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 55.5% when compared to the same quarter one year ago, falling from -$16.14 million to -$25.11 million.

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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