Stock To Watch: Bonanza Creek Energy (BCEI) In Perilous Reversal

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 Bonanza Creek Energy ( BCEI) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Bonanza Creek Energy as such a stock due to the following factors:

  • BCEI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $40.2 million.
  • BCEI has traded 515,069 shares today.
  • BCEI is down 3.1% today.
  • BCEI was up 6.1% yesterday.

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More details on BCEI:

Bonanza Creek Energy, Inc., an independent energy company, engages in the acquisition, exploration, development, and production of onshore oil and associated liquids natural gas in the United States. BCEI has a PE ratio of 57.1. Currently there are 9 analysts that rate Bonanza Creek Energy a buy, no analysts rate it a sell, and 9 rate it a hold.

The average volume for Bonanza Creek Energy has been 1.3 million shares per day over the past 30 days. Bonanza Creek Energy has a market cap of $1.2 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.80 and a short float of 16.4% with 3.46 days to cover. Shares are up 3.5% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Bonanza Creek Energy as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • BONANZA CREEK ENERGY INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, BONANZA CREEK ENERGY INC reported lower earnings of $0.40 versus $1.72 in the prior year. For the next year, the market is expecting a contraction of 292.5% in earnings (-$0.77 versus $0.40).
  • 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 236.9% when compared to the same quarter one year ago, falling from $13.46 million to -$18.42 million.
  • 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, BONANZA CREEK ENERGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $32.09 million or 58.69% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, BONANZA CREEK ENERGY INC has marginally lower results.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 50.07%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 270.83% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

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