EOG Resources (EOG) Is Water-Logged And Getting Wetter 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 EOG Resources ( EOG) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified EOG Resources as such a stock due to the following factors:

  • EOG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $354.5 million.
  • EOG has traded 2.1 million shares today.
  • EOG traded in a range 211.3% of the normal price range with a price range of $4.30.
  • EOG traded below its daily resistance level (quality: 20 days, meaning that the stock is crossing a resistance level set by the last 20 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on EOG:

EOG Resources, Inc., together with its subsidiaries, explores for, develops, produces, and markets crude oil and natural gas. The stock currently has a dividend yield of 0.7%. EOG has a PE ratio of 18.6. Currently there are 15 analysts that rate EOG Resources a buy, 3 analysts rate it a sell, and 7 rate it a hold.

The average volume for EOG Resources has been 4.5 million shares per day over the past 30 days. EOG has a market cap of $54.2 billion and is part of the basic materials sector and energy industry. The stock has a beta of 0.71 and a short float of 1.8% with 2.91 days to cover. Shares are up 7.4% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates EOG Resources as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, notable return on equity and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 33.1%. Since the same quarter one year prior, revenues rose by 12.7%. 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 current debt-to-equity ratio, 0.33, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.16, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has slightly increased to $2,110.44 million or 5.45% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -42.26%.
  • 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, EOG RESOURCES INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • The gross profit margin for EOG RESOURCES INC is currently very high, coming in at 80.66%. Regardless of EOG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, EOG's net profit margin of 10.58% compares favorably to the industry average.

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