Energen (EGN): Today's Weak On High Volume 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 Energen ( EGN) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Energen as such a stock due to the following factors:

  • EGN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $70.9 million.
  • EGN has traded 1.4 million shares today.
  • EGN is trading at 30.96 times the normal volume for the stock at this time of day.
  • EGN is trading at a new low 4.00% 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 EGN:

Energen Corporation, through its subsidiary Energen Resources Corporation, explores for, develops, and produces oil, natural gas, and natural gas liquids in the United States. The stock currently has a dividend yield of 0.1%. EGN has a PE ratio of 79. Currently there are 8 analysts that rate Energen a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Energen has been 854,600 shares per day over the past 30 days. Energen has a market cap of $5.4 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.04 and a short float of 3.1% with 1.99 days to cover. Shares are up 16% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Energen 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 a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and unimpressive growth in net income.

Highlights from the ratings report include:
  • The current debt-to-equity ratio, 0.36, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.95 is somewhat weak and could be cause for future problems.
  • 36.30% is the gross profit margin for ENERGEN CORP which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, EGN's net profit margin of -8.20% significantly underperformed when compared to the industry average.
  • ENERGEN 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, ENERGEN CORP reported lower earnings of $1.36 versus $1.95 in the prior year. For the next year, the market is expecting a contraction of 41.5% in earnings ($0.80 versus $1.36).
  • 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 128.9% when compared to the same quarter one year ago, falling from $53.32 million to -$15.42 million.

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