Pengrowth Energy (PGH): Today's Weak On High Volume Stock

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

  • PGH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $10.2 million.
  • PGH has traded 686,475 shares today.
  • PGH is trading at 4.69 times the normal volume for the stock at this time of day.
  • PGH is trading at a new low 3.09% 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 PGH:

Pengrowth Energy Corporation, together with its subsidiaries, acquires, explores for, develops, and produces oil and natural gas reserves in the provinces of Alberta, British Columbia, Saskatchewan, and Nova Scotia in Canada. The stock currently has a dividend yield of 10.7%. Currently there are 3 analysts that rate Pengrowth Energy a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Pengrowth Energy has been 2.0 million shares per day over the past 30 days. Pengrowth Energy has a market cap of $2.1 billion and is part of the basic materials sector and energy industry. Shares are down 37.4% year-to-date as of the close of trading on Monday.

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 Pengrowth Energy as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, PENGROWTH ENERGY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $109.40 million or 47.60% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • PGH's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 37.39%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • PENGROWTH ENERGY CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, PENGROWTH ENERGY CORP swung to a loss, reporting -$0.61 versus $0.04 in the prior year.
  • PGH, with its decline in revenue, underperformed when compared the industry average of 1.9%. Since the same quarter one year prior, revenues fell by 26.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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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