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

  • SD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $22.7 million.
  • SD has traded 3.6 million shares today.
  • SD is trading at 5.75 times the normal volume for the stock at this time of day.
  • SD is trading at a new low 11.04% 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 SD:

SandRidge Energy, Inc., an oil and natural gas company, explores for and produces oil and natural gas properties primarily in the Mid-Continent region of the United States. SD has a PE ratio of 4.2. Currently there are no analysts that rate SandRidge Energy a buy, 5 analysts rate it a sell, and 6 rate it a hold.

The average volume for SandRidge Energy has been 14.5 million shares per day over the past 30 days. SandRidge Energy has a market cap of $859.2 million and is part of the basic materials sector and energy industry. The stock has a beta of 2.48 and a short float of 17% with 4.39 days to cover. Shares are down 2.8% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates SandRidge Energy as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 659.1% when compared to the same quarter one year ago, falling from -$136.34 million to -$1,034.95 million.
  • The debt-to-equity ratio is very high at 3.76 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, SD has a quick ratio of 0.53, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, SANDRIDGE ENERGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has declined marginally to $90.10 million or 0.39% when compared to the same quarter last year. Despite a decrease in cash flow of 0.39%, SANDRIDGE ENERGY INC is still significantly exceeding the industry average of -51.14%.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 73.59%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 606.45% compared to the year-earlier 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.

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