Today's Weak On High Volume Stock: Newpark Resources (NR)

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

  • NR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $5.4 million.
  • NR has traded 144,036 shares today.
  • NR is trading at 8.31 times the normal volume for the stock at this time of day.
  • NR is trading at a new low 8.19% 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 NR:

Newpark Resources, Inc. provides various products and services primarily to the oil and gas exploration industry. The company operates in two segments, Fluids Systems, and Mats and Integrated Services. NR has a PE ratio of 12. Currently there are 4 analysts that rate Newpark Resources a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Newpark Resources has been 813,200 shares per day over the past 30 days. Newpark has a market cap of $751.9 million and is part of the basic materials sector and energy industry. The stock has a beta of 1.23 and a short float of 9.4% with 11.65 days to cover. Shares are down 6.3% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Newpark Resources as a buy. 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, good cash flow from operations and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • NR's debt-to-equity ratio is very low at 0.30 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 2.77, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has significantly increased by 779.13% to $31.60 million when compared to the same quarter last year. In addition, NEWPARK RESOURCES has also vastly surpassed the industry average cash flow growth rate of 12.41%.
  • NR, with its decline in revenue, underperformed when compared the industry average of 1.7%. Since the same quarter one year prior, revenues fell by 14.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Energy Equipment & Services industry and the overall market, NEWPARK RESOURCES's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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