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

  • HK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $18.9 million.
  • HK has traded 163,964 shares today.
  • HK is up 3.5% today.
  • HK was down 9.2% yesterday.

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More details on HK:

Halcon Resources Corporation, an independent energy company, is engaged in the acquisition, production, exploration, and development of onshore oil and natural gas properties in the United States. Currently there are 5 analysts that rate Halcon Resources a buy, 2 analysts rate it a sell, and 6 rate it a hold.

The average volume for Halcon Resources has been 7.9 million shares per day over the past 30 days. Halcon has a market cap of $861.8 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 24.9% with 6.67 days to cover. Shares are down 43.5% year-to-date as of the close of trading on Friday.

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 Halcon Resources as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • The debt-to-equity ratio is very high at 2.33 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, HK has a quick ratio of 0.59, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • HK'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 46.60%, 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.
  • 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, HALCON RESOURCES CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • HALCON RESOURCES 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, HALCON RESOURCES CORP reported poor results of -$3.11 versus -$1.24 in the prior year. This year, the market expects an improvement in earnings ($0.13 versus -$3.11).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 123.1% when compared to the same quarter one year prior, rising from -$854.83 million to $197.64 million.

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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