Rex Energy (REXX) Is Today's Perilous Reversal Stock

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

  • REXX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $15.2 million.
  • REXX has traded 897,117 shares today.
  • REXX is down 3.2% today.
  • REXX was up 6.3% yesterday.

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More details on REXX:

Rex Energy Corporation operates as an independent oil, natural gas liquid, and natural gas company in the Appalachian and Illinois basins in the United States. Currently there are 4 analysts that rate Rex Energy a buy, no analysts rate it a sell, and 10 rate it a hold.

The average volume for Rex Energy has been 2.8 million shares per day over the past 30 days. Rex Energy has a market cap of $296.8 million and is part of the basic materials sector and energy industry. The stock has a beta of 2.22 and a short float of 38.2% with 4.55 days to cover. Shares are up 5.3% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Rex 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, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

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 300.9% when compared to the same quarter one year ago, falling from $8.87 million to -$17.81 million.
  • The debt-to-equity ratio of 1.41 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 0.27, which clearly demonstrates the inability to cover short-term cash 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, REX ENERGY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 75.05%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 341.17% 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.
  • REX ENERGY CORP 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, REX ENERGY CORP reported poor results of -$0.94 versus -$0.03 in the prior year. This year, the market expects an improvement in earnings (-$0.83 versus -$0.94).

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