Today's Perilous Reversal Stock: Oasis Petroleum (OAS)

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

  • OAS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $153.8 million.
  • OAS has traded 160,938 shares today.
  • OAS is down 3% today.
  • OAS was up 16.4% yesterday.

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More details on OAS:

Oasis Petroleum Inc., an independent exploration and production company, focuses on the acquisition and development of oil and natural gas resources in the North Dakota and Montana regions of the Williston Basin. OAS has a PE ratio of 3.2. Currently there are 14 analysts that rate Oasis Petroleum a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Oasis Petroleum has been 4.6 million shares per day over the past 30 days. Oasis has a market cap of $1.2 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.53 and a short float of 8.9% with 0.77 days to cover. Shares are down 74% 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 Oasis Petroleum as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and reasonable valuation levels. 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:
  • The revenue growth came in higher than the industry average of 6.3%. Since the same quarter one year prior, revenues rose by 20.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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, OASIS PETROLEUM INC's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for OASIS PETROLEUM INC is currently very high, coming in at 72.56%. Regardless of OAS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, OAS's net profit margin of 32.98% significantly outperformed against the industry.
  • OAS'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 74.47%, 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.
  • Currently the debt-to-equity ratio of 1.51 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, OAS has a quick ratio of 0.68, this demonstrates the lack of ability of the company to cover short-term liquidity needs.

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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