Stock To Watch: Goodrich Petroleum (GDP) In Perilous Reversal

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 $33.0 million.
  • GDP has traded 68,302 shares today.
  • GDP is down 3.2% today.
  • GDP was up 6.5% 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 1 rates 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 $662.0 million and is part of the basic materials sector and energy industry. The stock has a beta of 2.38 and a short float of 48% with 6.72 days to cover. Shares are down 6.8% year-to-date as of the close of trading on Wednesday.

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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, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 3.1%. 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.
  • Net operating cash flow has significantly increased by 113.90% to $63.29 million when compared to the same quarter last year. In addition, GOODRICH PETROLEUM CORP has also vastly surpassed the industry average cash flow growth rate of -5.24%.
  • 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.
  • 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.
  • Currently the debt-to-equity ratio of 1.79 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.38, which clearly demonstrates the inability to cover short-term cash needs.

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