EP Energy (EPE) Highlighted As Weak On High Volume

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

  • EPE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $32.7 million.
  • EPE has traded 187,673 shares today.
  • EPE is trading at 2.89 times the normal volume for the stock at this time of day.
  • EPE is trading at a new low 5.05% 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.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in EPE with the Ticky from Trade-Ideas. See the FREE profile for EPE NOW at Trade-Ideas

More details on EPE:

EP Energy Corporation, an independent exploration and production company, acquires and develops unconventional onshore oil and natural gas properties in the United States. EPE has a PE ratio of 10.7. Currently there are 4 analysts that rate EP Energy a buy, 1 analyst rates it a sell, and 8 rate it a hold.

The average volume for EP Energy has been 2.2 million shares per day over the past 30 days. EP Energy has a market cap of $3.6 billion and is part of the basic materials sector and energy industry. Shares are up 39.3% year-to-date as of the close of trading on Thursday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates EP Energy as a sell. Among the areas we feel are negative, one of the most important has been very high debt management risk by most measures.

Highlights from the ratings report include:
  • The debt-to-equity ratio of 1.06 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.35, which clearly demonstrates the inability to cover short-term cash needs.
  • EP ENERGY 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 year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, EP ENERGY CORP turned its bottom line around by earning $2.97 versus -$0.42 in the prior year. For the next year, the market is expecting a contraction of 78.5% in earnings ($0.64 versus $2.97).
  • EPE'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 30.59%, 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.
  • The gross profit margin for EP ENERGY CORP is currently very high, coming in at 92.29%. Regardless of EPE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, EPE's net profit margin of 42.86% significantly outperformed against the industry.
  • Net operating cash flow has significantly increased by 61.84% to $280.00 million when compared to the same quarter last year. In addition, EP ENERGY CORP has also vastly surpassed the industry average cash flow growth rate of -13.13%.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

If you liked this article you might like

Betting on Oil's Turnaround? Here's Where to Put Your Money

Betting on Oil's Turnaround? Here's Where to Put Your Money

Chesapeake Energy Exceeds $2 Billion Divestiture Target for 2016

Chesapeake Energy Exceeds $2 Billion Divestiture Target for 2016

Finding the Bullish and Bearish Reversals

Finding the Bullish and Bearish Reversals

Baker Hughes U.S. Rig Count Up For Eighth Straight Week

Baker Hughes U.S. Rig Count Up For Eighth Straight Week

Stock To Watch: EP Energy (EPE) In Perilous Reversal

Stock To Watch: EP Energy (EPE) In Perilous Reversal