After-Hours Trading Shows Rosetta Resources (ROSE) Lagging

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 Rosetta Resources ( ROSE) as a post-market laggard candidate. In addition to specific proprietary factors, Trade-Ideas identified Rosetta Resources as such a stock due to the following factors:

  • ROSE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $51.6 million.
  • ROSE is down 3.5% today from today's close.

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More details on ROSE:

Rosetta Resources Inc., an independent exploration and production company, acquires and develops onshore energy resources in the United States. ROSE has a PE ratio of 4.5. Currently there are 8 analysts that rate Rosetta Resources a buy, 1 analyst rates it a sell, and 11 rate it a hold.

The average volume for Rosetta Resources has been 3.5 million shares per day over the past 30 days. Rosetta has a market cap of $1.7 billion and is part of the basic materials sector and energy industry. The stock has a beta of 2.08 and a short float of 10.9% with 3.59 days to cover. Shares are down 2.6% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Rosetta Resources as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • ROSE's very impressive revenue growth greatly exceeded the industry average of 33.1%. Since the same quarter one year prior, revenues leaped by 145.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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 528.8% when compared to the same quarter one year prior, rising from $29.50 million to $185.47 million.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, ROSETTA RESOURCES INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • ROSE'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 51.78%, 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 debt-to-equity ratio of 1.20 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 0.43, which clearly demonstrates the inability to cover short-term cash needs.

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