Today's Post-Market Loser: Diamondback Energy (FANG)

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 Diamondback Energy ( FANG) as a post-market laggard candidate. In addition to specific proprietary factors, Trade-Ideas identified Diamondback Energy as such a stock due to the following factors:

  • FANG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $74.7 million.
  • FANG is down 9.8% today from today's close.

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More details on FANG:

Diamondback Energy, Inc., an independent oil and natural gas company, focuses on the acquisition, development, exploration, and exploitation of onshore oil and natural gas reserves in the Permian Basin in West Texas. FANG has a PE ratio of 42.6. Currently there are 14 analysts that rate Diamondback Energy a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Diamondback Energy has been 1.2 million shares per day over the past 30 days. Diamondback Energy has a market cap of $4.3 billion and is part of the basic materials sector and energy industry. Shares are up 47.9% year-to-date as of the close of trading on Tuesday.

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 Diamondback Energy as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:
  • FANG's very impressive revenue growth greatly exceeded the industry average of 3.0%. Since the same quarter one year prior, revenues leaped by 179.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • DIAMONDBACK ENERGY INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, DIAMONDBACK ENERGY INC turned its bottom line around by earning $1.26 versus -$1.04 in the prior year. This year, the market expects an improvement in earnings ($2.66 versus $1.26).
  • The current debt-to-equity ratio, 0.44, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that FANG's debt-to-equity ratio is low, the quick ratio, which is currently 0.63, displays a potential problem in covering short-term cash needs.
  • 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. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, DIAMONDBACK ENERGY INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • Powered by its strong earnings growth of 50.00% and other important driving factors, this stock has surged by 65.73% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.

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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