Perilous Reversal Stock: Comstock Resources (CRK)

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 Comstock Resources ( CRK) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Comstock Resources as such a stock due to the following factors:

  • CRK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $27.1 million.
  • CRK has traded 133,574 shares today.
  • CRK is down 3% today.
  • CRK was up 5.9% yesterday.

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More details on CRK:

Comstock Resources, Inc., an independent energy company, acquires, develops, explores, and produces oil and natural gas properties in the United States. Its oil and gas operations are primarily located in East Texas/North Louisiana and South Texas. The stock currently has a dividend yield of 5.3%. Currently there are 4 analysts that rate Comstock Resources a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Comstock Resources has been 1.6 million shares per day over the past 30 days. Comstock has a market cap of $453.2 million and is part of the basic materials sector and energy industry. The stock has a beta of 2.10 and a short float of 15.1% with 2.41 days to cover. Shares are down 45.2% year-to-date as of the close of trading on Wednesday.

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 Comstock Resources as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • The debt-to-equity ratio of 1.06 is relatively high when compared with the industry average, suggesting a need for better debt level management.
  • CRK'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 36.46%, 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.
  • 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. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, COMSTOCK RESOURCES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • COMSTOCK RESOURCES INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, COMSTOCK RESOURCES INC reported poor results of -$2.29 versus -$2.23 in the prior year. This year, the market expects an improvement in earnings ($0.35 versus -$2.29).
  • The gross profit margin for COMSTOCK RESOURCES INC is currently very high, coming in at 82.50%. 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 -1.31% trails the industry average.

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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