Trade-Ideas: Goodrich Petroleum (GDP) Is Today's

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 Goodrich Petroleum ( GDP) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Goodrich Petroleum as such a stock due to the following factors:

  • GDP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $24.5 million.
  • GDP has traded 221,389 shares today.
  • GDP is up 4.1% today.
  • GDP was down 7.7% yesterday.

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More details on GDP:

Goodrich Petroleum Corporation, an independent oil and natural gas company, is engaged in the exploration, development, and production of oil and natural gas. Currently there are 7 analysts that rate Goodrich Petroleum a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Goodrich Petroleum has been 2.9 million shares per day over the past 30 days. Goodrich has a market cap of $165.7 million and is part of the basic materials sector and energy industry. The stock has a beta of 1.71 and a short float of 55.4% with 2.79 days to cover. Shares are down 75% 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 Goodrich Petroleum as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • 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 194.3% when compared to the same quarter one year ago, falling from -$27.09 million to -$79.71 million.
  • The debt-to-equity ratio is very high at 2.84 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.41, which clearly demonstrates the inability to cover short-term cash needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, GOODRICH PETROLEUM CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 73.72%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 120.22% compared to the year-earlier 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.
  • GOODRICH PETROLEUM CORP 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, GOODRICH PETROLEUM CORP reported poor results of -$2.99 versus -$2.48 in the prior year. This year, the market expects an improvement in earnings (-$1.95 versus -$2.99).

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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