Bonanza Creek Energy (BCEI) Highlighted As Weak On High Volume

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 $29.5 million.
  • BCEI has traded 90,357 shares today.
  • BCEI is trading at 2.16 times the normal volume for the stock at this time of day.
  • BCEI is trading at a new low 3.22% 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 17.1. Currently there are 13 analysts that rate Bonanza Creek Energy a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Bonanza Creek Energy has been 1.2 million shares per day over the past 30 days. Bonanza Creek Energy has a market cap of $1.5 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 11.8% with 3.26 days to cover. Shares are down 37.4% 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 Bonanza Creek Energy as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • BCEI's revenue growth has slightly outpaced the industry average of 15.4%. Since the same quarter one year prior, revenues rose by 24.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • BONANZA CREEK ENERGY INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. 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 ($1.85 versus $1.72).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, BONANZA CREEK ENERGY INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • BCEI'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 40.17%, 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. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • The debt-to-equity ratio of 1.04 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, BCEI maintains a poor quick ratio of 0.81, which illustrates the inability to avoid short-term cash problems.

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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