Warren Resources (WRES) Stock: Weak On High Volume 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 Warren Resources ( WRES) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Warren Resources as such a stock due to the following factors:

  • WRES has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.6 million.
  • WRES has traded 886,350 shares today.
  • WRES is trading at 7.51 times the normal volume for the stock at this time of day.
  • WRES is trading at a new low 9.32% 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 WRES:

Warren Resources, Inc., an independent energy company, is engaged in the exploration, development, and production of onshore crude oil and gas reserves. The company holds interests in various properties that are located in California, Wyoming, New Mexico, and Texas. WRES has a PE ratio of 5.2. Currently there is 1 analyst that rates Warren Resources a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Warren Resources has been 1.8 million shares per day over the past 30 days. Warren has a market cap of $146.2 million and is part of the basic materials sector and energy industry. The stock has a beta of 2.50 and a short float of 10.3% with 2.71 days to cover. Shares are down 42.7% 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 Warren Resources as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 6.4%. Since the same quarter one year prior, revenues rose by 16.8%. 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.
  • The gross profit margin for WARREN RESOURCES INC is rather high; currently it is at 65.70%. Regardless of WRES's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WRES's net profit margin of 9.19% compares favorably to the industry average.
  • WARREN RESOURCES 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. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, WARREN RESOURCES INC increased its bottom line by earning $0.42 versus $0.21 in the prior year. For the next year, the market is expecting a contraction of 26.2% in earnings ($0.31 versus $0.42).
  • The share price of WARREN RESOURCES INC has not done very well: it is down 21.32% 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, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.

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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