Weak On High Volume: Atwood Oceanics (ATW)

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 Atwood Oceanics ( ATW) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Atwood Oceanics as such a stock due to the following factors:

  • ATW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $62.2 million.
  • ATW has traded 166,768 shares today.
  • ATW is trading at 3.48 times the normal volume for the stock at this time of day.
  • ATW is trading at a new low 4.01% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of 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 (or avoid losses by trimming weak positions). 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 ATW:

Atwood Oceanics, Inc., an offshore drilling contractor, is engaged in the drilling and completion of exploratory and developmental oil and gas wells worldwide. The stock currently has a dividend yield of 2.5%. ATW has a PE ratio of 7.9. Currently there are 3 analysts that rate Atwood Oceanics a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for Atwood Oceanics has been 1.0 million shares per day over the past 30 days. Atwood Oceanics has a market cap of $2.6 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.77 and a short float of 6.3% with 2.54 days to cover. Shares are down 23.9% 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 Atwood Oceanics as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 12.7%. Since the same quarter one year prior, revenues slightly increased by 7.4%. 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 increased to $172.74 million or 46.41% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 10.63%.
  • Despite currently having a low debt-to-equity ratio of 0.60, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that ATW's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.39 is high and demonstrates strong liquidity.
  • 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 Energy Equipment & Services industry. The net income has decreased by 20.1% when compared to the same quarter one year ago, dropping from $89.98 million to $71.93 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Energy Equipment & Services industry and the overall market, ATWOOD OCEANICS's return on equity is below that of both the industry average and the S&P 500.

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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