Goodrich Petroleum (GDP) Stock: Weak On High Volume Today

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

  • GDP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $8.3 million.
  • GDP has traded 345,054 shares today.
  • GDP is trading at 2.08 times the normal volume for the stock at this time of day.
  • GDP is trading at a new low 4.01% 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 GDP:

Goodrich Petroleum Corporation, an independent oil and natural gas company, engages in the exploration, development, and production of oil and natural gas. Currently there are 2 analysts that rate Goodrich Petroleum a buy, 2 analysts rate it a sell, and 11 rate it a hold.

The average volume for Goodrich Petroleum has been 3.7 million shares per day over the past 30 days. Goodrich has a market cap of $221.0 million and is part of the basic materials sector and energy industry. The stock has a beta of 3.48 and a short float of 29.7% with 5.37 days to cover. Shares are down 12.8% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Goodrich Petroleum as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, weak operating cash flow, 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 861.2% when compared to the same quarter one year ago, falling from -$23.50 million to -$225.83 million.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 85.87%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 616.43% 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.
  • Net operating cash flow has decreased to $26.56 million or 13.09% when compared to the same quarter last year. Despite a decrease in cash flow of 13.09%, GOODRICH PETROLEUM CORP is in line with the industry average cash flow growth rate of -13.13%.
  • GOODRICH PETROLEUM CORP 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, GOODRICH PETROLEUM CORP reported poor results of -$8.60 versus -$2.99 in the prior year. This year, the market expects an improvement in earnings (-$1.71 versus -$8.60).
  • Despite the weak revenue results, GDP has outperformed against the industry average of 20.3%. Since the same quarter one year prior, revenues slightly dropped by 4.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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