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

  • UPL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $23.7 million.
  • UPL has traded 231,385 shares today.
  • UPL is down 4.4% today.
  • UPL was up 8.3% yesterday.

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More details on UPL:

Ultra Petroleum Corp., an independent oil and gas company, engages in the acquisition, exploration, development, production, and operation of oil and natural gas properties in the United States. UPL has a PE ratio of 4.1. Currently there are 2 analysts that rate Ultra Petroleum a buy, 3 analysts rate it a sell, and 9 rate it a hold.

The average volume for Ultra Petroleum has been 2.3 million shares per day over the past 30 days. Ultra has a market cap of $2.2 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.97 and a short float of 20% with 19.02 days to cover. Shares are up 18.2% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Ultra Petroleum as a hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, good cash flow from operations and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:
  • 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 410.1% when compared to the same quarter one year prior, rising from $41.12 million to $209.73 million.
  • Net operating cash flow has increased to $197.42 million or 35.62% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -11.94%.
  • ULTRA PETROLEUM CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, ULTRA PETROLEUM CORP increased its bottom line by earning $3.51 versus $1.54 in the prior year. For the next year, the market is expecting a contraction of 86.8% in earnings ($0.47 versus $3.51).
  • UPL'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 36.37%, 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.

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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