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

  • CRK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $11.8 million.
  • CRK has traded 384,533 shares today.
  • CRK is trading at 2.45 times the normal volume for the stock at this time of day.
  • CRK is trading at a new low 3.09% 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 CRK:

Comstock Resources, Inc., an independent energy company, acquires, develops, explores, and produces oil and natural gas properties in the United States. Its oil and gas operations are primarily located in East Texas/North Louisiana and South Texas. The stock currently has a dividend yield of 11.8%. Currently there are 4 analysts that rate Comstock Resources a buy, 2 analysts rate it a sell, and 6 rate it a hold.

The average volume for Comstock Resources has been 2.5 million shares per day over the past 30 days. Comstock has a market cap of $201.2 million and is part of the basic materials sector and energy industry. The stock has a beta of 3.26 and a short float of 43.1% with 5.21 days to cover. Shares are down 37.9% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Comstock Resources 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 6838.4% when compared to the same quarter one year ago, falling from $1.17 million to -$78.50 million.
  • Currently the debt-to-equity ratio of 1.76 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, COMSTOCK RESOURCES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $60.86 million or 36.43% when compared to the same quarter last year. Despite a decrease in cash flow COMSTOCK RESOURCES INC is still fairing well by exceeding its industry average cash flow growth rate of -50.94%.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 83.20%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 8650.00% 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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