Trade-Ideas: ONEOK (OKE) Is Today's Weak On High Relative Volume Stock

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 weak on high relative volume 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 $87.8 million.
  • OKE has traded 187,519 shares today.
  • OKE is trading at 3.47 times the normal volume for the stock at this time of day.
  • OKE is trading at a new low 3.01% 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 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 31.6. 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 5.30 days to cover. Shares are down 3.7% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates ONEOK as a hold. Among the primary strengths of the company is its respectable return on equity which we feel is likely to continue. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and weak operating cash flow.

Highlights from the ratings report include:
  • 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, ONEOK INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • ONEOK INC's earnings per share declined by 34.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. 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).
  • OKE, with its decline in revenue, slightly underperformed the industry average of 35.2%. Since the same quarter one year prior, revenues fell by 42.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Net operating cash flow has significantly decreased to $39.27 million or 91.99% 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 share price of ONEOK INC has not done very well: it is down 24.77% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.

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