Strong On High Volume: Parker Drilling (PKD)

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 Parker Drilling ( PKD) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Parker Drilling as such a stock due to the following factors:

  • PKD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.6 million.
  • PKD has traded 84,344 shares today.
  • PKD is trading at 3.28 times the normal volume for the stock at this time of day.
  • PKD is trading at a new high 3.03% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on PKD:

Parker Drilling Company, together with its subsidiaries, provides contract drilling and drilling-related services and rental tools in the United States, Latin America, Africa, the Middle East, the Asia Pacific, Europe, and the Commonwealth of Independent States. PKD has a PE ratio of 34.9. Currently there are 2 analysts that rate Parker Drilling a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Parker Drilling has been 629,700 shares per day over the past 30 days. Parker has a market cap of $764.5 million and is part of the basic materials sector and energy industry. The stock has a beta of 1.80 and a short float of 2% with 4.08 days to cover. Shares are down 22.8% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Parker Drilling as a hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth and good cash flow from operations. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Energy Equipment & Services industry. The net income increased by 89.4% when compared to the same quarter one year prior, rising from $8.28 million to $15.68 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 20.4%. Since the same quarter one year prior, revenues rose by 12.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • PARKER DRILLING CO 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, PARKER DRILLING CO reported lower earnings of $0.22 versus $0.31 in the prior year. This year, the market expects an improvement in earnings ($0.42 versus $0.22).
  • 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.
  • The gross profit margin for PARKER DRILLING CO is currently lower than what is desirable, coming in at 31.34%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 6.16% trails that of the industry average.

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