Magnum Hunter Resources Corporation (MHR) Showing Signs Of A Dead Cat Bounce Today

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 Magnum Hunter Resources Corporation ( MHR) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Magnum Hunter Resources Corporation as such a stock due to the following factors:

  • MHR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $24.1 million.
  • MHR has traded 53,024 shares today.
  • MHR is up 3.6% today.
  • MHR was down 5.7% yesterday.

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More details on MHR:

Magnum Hunter Resources Corporation, an independent oil and natural gas company, explores for, exploits, acquires, develops, and produces crude oil, natural gas, and natural gas liquid resources in the United States. Currently there are 7 analysts that rate Magnum Hunter Resources Corporation a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Magnum Hunter Resources Corporation has been 5.5 million shares per day over the past 30 days. Magnum Hunter has a market cap of $925.2 million and is part of the basic materials sector and energy industry. The stock has a beta of 1.88 and a short float of 24.4% with 6.89 days to cover. Shares are down 39.5% 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 Magnum Hunter Resources Corporation as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • 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 139.1% when compared to the same quarter one year ago, falling from $165.44 million to -$64.65 million.
  • The debt-to-equity ratio of 1.13 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.50, which clearly demonstrates the inability to cover short-term cash needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, MAGNUM HUNTER RESOURCES CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 39.56%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 425.00% compared to the year-earlier 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.
  • MAGNUM HUNTER RESOURCES CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, MAGNUM HUNTER RESOURCES CORP reported poor results of -$1.53 versus -$0.96 in the prior year. This year, the market expects an improvement in earnings (-$0.56 versus -$1.53).

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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