Whiting Petroleum (WLL) Marked As A Barbarian At The Gate

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 Whiting Petroleum ( WLL) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Whiting Petroleum as such a stock due to the following factors:

  • WLL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $172.1 million.
  • WLL has traded 4.0 million shares today.
  • WLL traded in a range 222.6% of the normal price range with a price range of $2.57.
  • WLL traded above its daily resistance level (quality: 17 days, meaning that the stock is crossing a resistance level set by the last 17 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on WLL:

Whiting Petroleum Corporation, an independent oil and gas company, acquires, explores, develops, and produces crude oil, natural gas liquids, and natural gas in the Rocky Mountains and Permian Basin regions of the United States. Currently there are 19 analysts that rate Whiting Petroleum a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for Whiting Petroleum has been 8.4 million shares per day over the past 30 days. Whiting has a market cap of $6.8 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.87 and a short float of 8.7% with 3.54 days to cover. Shares are down 2.1% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Whiting 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 and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • The debt-to-equity ratio is somewhat low, currently at 0.77, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that WLL's debt-to-equity ratio is low, the quick ratio, which is currently 0.69, displays a potential problem in covering short-term cash needs.
  • Despite the weak revenue results, WLL has outperformed against the industry average of 38.6%. Since the same quarter one year prior, revenues fell by 27.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for WHITING PETROLEUM CORP is rather high; currently it is at 59.91%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, WLL's net profit margin of -20.18% 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 197.3% when compared to the same quarter one year ago, falling from $109.07 million to -$106.11 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, WHITING PETROLEUM CORP's return on equity significantly trails that of both the industry average and the S&P 500.

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