Magnum Hunter Resources Corporation (MHR) Strong On High Relative 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 Magnum Hunter Resources Corporation ( MHR) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Magnum Hunter Resources Corporation as such a stock due to the following factors:

  • MHR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $11.1 million.
  • MHR has traded 500,690 shares today.
  • MHR is trading at 2.66 times the normal volume for the stock at this time of day.
  • MHR is trading at a new high 8.63% 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 MHR:

Magnum Hunter Resources Corporation, an independent oil and gas company, explores for, exploits, acquires, develops, and produces crude oil, natural gas, and natural gas liquid resources in the United States. The company operates through the U.S. Currently there are 5 analysts that rate Magnum Hunter Resources Corporation a buy, 2 analysts rate it a sell, and 5 rate it a hold.

The average volume for Magnum Hunter Resources Corporation has been 4.6 million shares per day over the past 30 days. Magnum Hunter has a market cap of $339.5 million and is part of the basic materials sector and energy industry. The stock has a beta of 2.37 and a short float of 27.3% with 6.05 days to cover. Shares are down 55.7% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Magnum Hunter Resources Corporation as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally high debt management risk, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • 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 72.0% when compared to the same quarter one year ago, falling from -$61.59 million to -$105.92 million.
  • The debt-to-equity ratio is very high at 2.22 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.20, which clearly demonstrates the inability to cover short-term cash needs.
  • 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, MAGNUM HUNTER RESOURCES CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 84.54%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 39.02% compared to 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.
  • MAGNUM HUNTER RESOURCES CORP's earnings per share declined by 39.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, MAGNUM HUNTER RESOURCES CORP continued to lose money by earning -$1.29 versus -$1.69 in the prior year. For the next year, the market is expecting a contraction of 8.5% in earnings (-$1.40 versus -$1.29).

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