ONEOK (OKE) Shows Signs Of Being Water-Logged And Getting Wetter

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 ONEOK ( OKE) 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 ONEOK as such a stock due to the following factors:

  • OKE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $65.9 million.
  • OKE has traded 1.9 million shares today.
  • OKE traded in a range 211% of the normal price range with a price range of $2.20.
  • OKE traded below its daily resistance level (quality: 50 days, meaning that the stock is crossing a resistance level set by the last 50 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 OKE:

ONEOK, Inc. engages in the gathering, processing, storage, and transportation of natural gas in the United States. It operates in Natural Gas Gathering and Processing, Natural Gas Liquids, and Natural Gas Pipelines segments. The stock currently has a dividend yield of 5%. OKE has a PE ratio of 31.7. Currently there are 4 analysts that rate ONEOK a buy, 2 analysts rate it a sell, and 7 rate it a hold.

The average volume for ONEOK has been 1.9 million shares per day over the past 30 days. ONEOK has a market cap of $10.0 billion and is part of the utilities sector and utilities industry. The stock has a beta of 1.16 and a short float of 5.2% with 7.26 days to cover. Shares are down 3.4% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates ONEOK as a hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, increase in net income and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and poor profit margins.

Highlights from the ratings report include:
  • ONEOK INC has improved earnings per share by 28.6% 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ONEOK INC increased its bottom line by earning $1.53 versus $1.33 in the prior year. This year, the market expects an improvement in earnings ($1.57 versus $1.53).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Oil, Gas & Consumable Fuels industry average. The net income increased by 4.2% when compared to the same quarter one year prior, going from $90.74 million to $94.54 million.
  • Despite the weak revenue results, OKE has outperformed against the industry average of 33.1%. Since the same quarter one year prior, revenues fell by 17.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • OKE has underperformed the S&P 500 Index, declining 23.92% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
  • The debt-to-equity ratio is very high at 13.95 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.38, which clearly demonstrates the inability to cover short-term cash needs.

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