Trade-Ideas: Bonanza Creek Energy (BCEI) Is Today's Weak On High Relative Volume Stock

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.

Trade-Ideas LLC identified Bonanza Creek Energy ( BCEI) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Bonanza Creek Energy as such a stock due to the following factors:

  • BCEI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $38.4 million.
  • BCEI has traded 91,823 shares today.
  • BCEI is trading at 2.54 times the normal volume for the stock at this time of day.
  • BCEI is trading at a new low 4.17% 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 BCEI:

Bonanza Creek Energy, Inc., an independent energy company, engages in the acquisition, exploration, development, and production of onshore oil and associated liquids natural gas in the United States. BCEI has a PE ratio of 66.4. Currently there are 9 analysts that rate Bonanza Creek Energy a buy, no analysts rate it a sell, and 9 rate it a hold.

The average volume for Bonanza Creek Energy has been 1.5 million shares per day over the past 30 days. Bonanza Creek Energy has a market cap of $1.3 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.79 and a short float of 16.4% with 3.98 days to cover. Shares are up 13.4% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Bonanza Creek Energy as a hold. The company's strongest point has been its a solid financial position based on a variety of debt and liquidity measures that we have looked at. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income.

Highlights from the ratings report include:
  • Despite the weak revenue results, BCEI has outperformed against the industry average of 20.3%. Since the same quarter one year prior, revenues slightly dropped by 7.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The debt-to-equity ratio of 1.14 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.48, which clearly demonstrates the inability to cover short-term cash needs.
  • BONANZA CREEK ENERGY INC 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, BONANZA CREEK ENERGY INC reported lower earnings of $0.40 versus $1.72 in the prior year. For the next year, the market is expecting a contraction of 280.0% in earnings (-$0.72 versus $0.40).
  • 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 269.9% when compared to the same quarter one year ago, falling from $25.43 million to -$43.22 million.

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