Ultra Petroleum (UPL) Weak On High Volume 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 Ultra Petroleum ( UPL) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Ultra Petroleum as such a stock due to the following factors:

  • UPL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $41.6 million.
  • UPL has traded 124,126 shares today.
  • UPL is trading at 2.25 times the normal volume for the stock at this time of day.
  • UPL is trading at a new low 3.04% 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 UPL:

Ultra Petroleum Corp., an independent oil and gas company, engages in the acquisition, exploration, development, production, and operation of oil and natural gas properties in the United States. UPL has a PE ratio of 5.7. Currently there are 3 analysts that rate Ultra Petroleum a buy, 2 analysts rate it a sell, and 10 rate it a hold.

The average volume for Ultra Petroleum has been 1.9 million shares per day over the past 30 days. Ultra has a market cap of $2.6 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.96 and a short float of 21% with 10.98 days to cover. Shares are up 30.8% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Ultra Petroleum as a hold. The company's strengths can be seen in multiple areas, such as its notable return on equity, robust revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ULTRA PETROLEUM CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The revenue growth greatly exceeded the industry average of 33.1%. Since the same quarter one year prior, revenues rose by 44.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ULTRA PETROLEUM 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, ULTRA PETROLEUM CORP increased its bottom line by earning $3.51 versus $1.54 in the prior year. For the next year, the market is expecting a contraction of 88.5% in earnings ($0.41 versus $3.51).
  • UPL'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 42.86%, 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. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The debt-to-equity ratio is very high at 15.96 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 0.34, which clearly demonstrates the inability to cover short-term cash needs.

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