Callon Petroleum (CPE) Is Strong 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 Callon Petroleum ( CPE) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Callon Petroleum as such a stock due to the following factors:

  • CPE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $12.8 million.
  • CPE has traded 189,079 shares today.
  • CPE is trading at 2.01 times the normal volume for the stock at this time of day.
  • CPE is trading at a new high 3.00% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into 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. 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 CPE:

Callon Petroleum Company engages in the exploration, development, acquisition, and production of oil and natural gas properties in the Permian Basin in West Texas. CPE has a PE ratio of 18. Currently there are 9 analysts that rate Callon Petroleum a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Callon Petroleum has been 2.3 million shares per day over the past 30 days. Callon has a market cap of $526.3 million and is part of the basic materials sector and energy industry. The stock has a beta of 1.55 and a short float of 10% with 4.09 days to cover. Shares are up 43.7% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Callon Petroleum 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, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • The debt-to-equity ratio is somewhat low, currently at 0.69, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.38 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • Despite the weak revenue results, CPE has outperformed against the industry average of 38.6%. Since the same quarter one year prior, revenues slightly dropped by 8.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for CALLON PETROLEUM CO/DE is rather high; currently it is at 69.65%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, CPE's net profit margin of -33.55% significantly underperformed when compared to the industry average.
  • 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 647.3% when compared to the same quarter one year ago, falling from $1.86 million to -$10.20 million.
  • Net operating cash flow has significantly decreased to $6.12 million or 69.32% 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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