Perilous Reversal Watch: Swift Energy (SFY)

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

  • SFY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $17.0 million.
  • SFY has traded 64,127 shares today.
  • SFY is down 13% today.
  • SFY was up 26.3% yesterday.

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More details on SFY:

Swift Energy Company is engaged in acquiring, exploring, developing, and operating oil and natural gas properties. It focuses on oil and natural gas reserves in Texas, as well as onshore and in the inland waters of Louisiana. Currently there are 2 analysts that rate Swift Energy a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Swift Energy has been 2.6 million shares per day over the past 30 days. Swift Energy has a market cap of $178.5 million and is part of the basic materials sector and energy industry. The stock has a beta of 2.17 and a short float of 36.4% with 3.73 days to cover. Shares are down 72.4% 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 Swift Energy as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally high debt management risk, 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 66.4% when compared to the same quarter one year ago, falling from $7.36 million to $2.47 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, SWIFT ENERGY CO's return on equity significantly trails that of both the industry average and the S&P 500.
  • SFY's debt-to-equity ratio of 0.99 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.41 is very low and demonstrates very weak liquidity.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 71.88%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 64.70% 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.
  • SWIFT ENERGY CO 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, SWIFT ENERGY CO swung to a loss, reporting -$0.07 versus $0.48 in the prior year. This year, the market expects an improvement in earnings ($0.14 versus -$0.07).

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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