Perilous Reversal Watch: Penn Virginia (PVA)

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

  • PVA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $20.4 million.
  • PVA has traded 58,059 shares today.
  • PVA is down 5.8% today.
  • PVA was up 14.4% yesterday.

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More details on PVA:

Penn Virginia Corporation, an independent oil and gas company, is engaged in the exploration, development, and production of crude oil, natural gas liquids, and natural gas in various onshore regions of the United States. Currently there are 8 analysts that rate Penn Virginia a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Penn Virginia has been 3.5 million shares per day over the past 30 days. Penn Virginia has a market cap of $345.6 million and is part of the basic materials sector and energy industry. The stock has a beta of 1.06 and a short float of 31.4% with 4.71 days to cover. Shares are down 53.5% 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 Penn Virginia as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and compelling growth in net income. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 6.3%. Since the same quarter one year prior, revenues rose by 16.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.98, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.13, which illustrates the ability to avoid short-term cash problems.
  • PENN VIRGINIA CORP 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, PENN VIRGINIA CORP reported poor results of -$2.36 versus -$2.14 in the prior year. This year, the market expects an improvement in earnings (-$0.32 versus -$2.36).
  • 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, PENN VIRGINIA CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • PVA'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 54.58%, 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.

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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