Weak On High Volume: Bonanza Creek Energy (BCEI)

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

  • BCEI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $42.6 million.
  • BCEI has traded 408,398 shares today.
  • BCEI is trading at 11.99 times the normal volume for the stock at this time of day.
  • BCEI is trading at a new low 6.02% 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 BCEI:

Bonanza Creek Energy, Inc., together with its subsidiaries, operates as an independent energy company in the United States. BCEI has a PE ratio of 31.9. Currently there are 12 analysts that rate Bonanza Creek Energy a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Bonanza Creek Energy has been 1.0 million shares per day over the past 30 days. Bonanza Creek Energy has a market cap of $1.8 billion and is part of the basic materials sector and energy industry. The stock has a beta of 2.68 and a short float of 11.5% with 3.61 days to cover. Shares are down 0.3% year-to-date as of the close of trading on Thursday.

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 Bonanza Creek Energy as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and generally higher debt management risk.

Highlights from the ratings report include:
  • BCEI's very impressive revenue growth greatly exceeded the industry average of 1.9%. Since the same quarter one year prior, revenues leaped by 79.5%. 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 62.05% to $80.29 million when compared to the same quarter last year. In addition, BONANZA CREEK ENERGY INC has also vastly surpassed the industry average cash flow growth rate of -6.46%.
  • BONANZA CREEK ENERGY INC 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. 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, BONANZA CREEK ENERGY INC increased its bottom line by earning $1.72 versus $1.11 in the prior year. This year, the market expects an improvement in earnings ($2.04 versus $1.72).
  • 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 92.1% when compared to the same quarter one year ago, falling from $14.72 million to $1.16 million.
  • The share price of BONANZA CREEK ENERGY INC has not done very well: it is down 16.31% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.

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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