Forum Energy Technologies (FET) Showing Signs Of A Dead Cat Bounce 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 Forum Energy Technologies ( FET) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Forum Energy Technologies as such a stock due to the following factors:

  • FET has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $19.4 million.
  • FET has traded 400,728 shares today.
  • FET is up 3.2% today.
  • FET was down 6% yesterday.

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More details on FET:

Forum Energy Technologies, Inc. designs, manufactures, and distributes products to the oil and natural gas industry in the United States and internationally. The company operates in two segments, Drilling & Subsea, and Production & Infrastructure. FET has a PE ratio of 13. Currently there are 6 analysts that rate Forum Energy Technologies a buy, 1 analyst rates it a sell, and 8 rate it a hold.

The average volume for Forum Energy Technologies has been 909,100 shares per day over the past 30 days. Forum Energy has a market cap of $2.0 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 13.4% with 4.96 days to cover. Shares are down 0.2% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Forum Energy Technologies as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and notable return on equity. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • The current debt-to-equity ratio, 0.34, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.16, which illustrates the ability to avoid short-term cash problems.
  • FET, with its decline in revenue, underperformed when compared the industry average of 1.6%. Since the same quarter one year prior, revenues fell by 13.8%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Looking at the price performance of FET's shares over the past 12 months, there is not much good news to report: the stock is down 33.27%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than 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.
  • Net operating cash flow has decreased to $48.50 million or 22.87% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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