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 Atwood Oceanics ( ATW) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Atwood Oceanics as such a stock due to the following factors:

  • ATW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $57.8 million.
  • ATW has traded 159,623 shares today.
  • ATW is trading at 2.08 times the normal volume for the stock at this time of day.
  • ATW is trading at a new low 5.03% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on ATW:

Atwood Oceanics, Inc., an offshore drilling contractor, engages in the drilling and completion of exploratory and developmental oil and gas wells worldwide. The stock currently has a dividend yield of 3.3%. ATW has a PE ratio of 6.5. Currently there are 4 analysts that rate Atwood Oceanics a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Atwood Oceanics has been 2.0 million shares per day over the past 30 days. Atwood Oceanics has a market cap of $2.0 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.10 and a short float of 6.5% with 2.11 days to cover. Shares are up 9.3% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Atwood Oceanics as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • ATW's revenue growth has slightly outpaced the industry average of 14.4%. Since the same quarter one year prior, revenues rose by 23.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for ATWOOD OCEANICS is rather high; currently it is at 57.82%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 13.14% is above that of the industry average.
  • ATW's debt-to-equity ratio of 0.67 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. Despite the fact that ATW's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.16 is high and demonstrates strong 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 35.56%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 44.53% 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.
  • 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. In comparison to the other companies in the Energy Equipment & Services industry and the overall market, ATWOOD OCEANICS's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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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