Today's Weak On High Volume Stock: Bill Barrett Corporation (BBG)

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

  • BBG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $20.2 million.
  • BBG has traded 293,128 shares today.
  • BBG is trading at 3.09 times the normal volume for the stock at this time of day.
  • BBG is trading at a new low 4.08% 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 BBG:

Bill Barrett Corporation, an independent energy company, acquires, explores for, and develops oil and natural gas resources in the United States. BBG has a PE ratio of 32.8. Currently there are 3 analysts that rate Bill Barrett Corporation a buy, 2 analysts rate it a sell, and 11 rate it a hold.

The average volume for Bill Barrett Corporation has been 2.3 million shares per day over the past 30 days. Bill Barrett has a market cap of $508.9 million and is part of the basic materials sector and energy industry. The stock has a beta of 1.32 and a short float of 35.9% with 5.52 days to cover. Shares are down 10.7% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Bill Barrett Corporation as a sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and weak operating cash flow.

Highlights from the ratings report include:
  • BBG'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 51.02%, 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. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
  • Net operating cash flow has significantly decreased to $30.42 million or 55.89% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, BILL BARRETT CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • BILL BARRETT CORP 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, BILL BARRETT CORP turned its bottom line around by earning $0.30 versus -$4.06 in the prior year. For the next year, the market is expecting a contraction of 186.7% in earnings (-$0.26 versus $0.30).
  • Along with the very weak revenue results, BBG underperformed when compared to the industry average of 33.1%. Since the same quarter one year prior, revenues plummeted by 52.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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