Today's Water-Logged And Getting Wetter Stock: Newfield Exploration (NFX)

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 Newfield Exploration ( NFX) 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 Newfield Exploration as such a stock due to the following factors:

  • NFX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $83.7 million.
  • NFX has traded 3.2 million shares today.
  • NFX traded in a range 229.2% of the normal price range with a price range of $3.06.
  • NFX traded below its daily resistance level (quality: 13 days, meaning that the stock is crossing a resistance level set by the last 13 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 NFX:

Newfield Exploration Company, an independent energy company, engages in the exploration, development, and production of crude oil, natural gas, and natural gas liquids. NFX has a PE ratio of 8.3. Currently there are 12 analysts that rate Newfield Exploration a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Newfield Exploration has been 3.5 million shares per day over the past 30 days. Newfield has a market cap of $6.3 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.37 and a short float of 3.8% with 2.76 days to cover. Shares are up 43.8% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Newfield Exploration as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income and expanding profit margins. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.

Highlights from the ratings report include:
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • 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 2017.6% when compared to the same quarter one year prior, rising from $17.00 million to $360.00 million.
  • The debt-to-equity ratio is somewhat low, currently at 0.74, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.38 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • NEWFIELD EXPLORATION CO 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, NEWFIELD EXPLORATION CO increased its bottom line by earning $4.71 versus $0.79 in the prior year. For the next year, the market is expecting a contraction of 83.3% in earnings ($0.79 versus $4.71).
  • Net operating cash flow has declined marginally to $317.00 million or 9.42% when compared to the same quarter last year. Despite a decrease in cash flow NEWFIELD EXPLORATION CO is still fairing well by exceeding its industry average cash flow growth rate of -42.26%.

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