Ultra Petroleum (UPL) Weak On High Volume

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

  • UPL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $23.5 million.
  • UPL has traded 105,525 shares today.
  • UPL is trading at 3.09 times the normal volume for the stock at this time of day.
  • UPL is trading at a new low 3.01% 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 UPL:

Ultra Petroleum Corp., an independent oil and gas company, engages in the acquisition, exploration, development, production, and operation of oil and natural gas properties in the United States. UPL has a PE ratio of 5. Currently there are 3 analysts that rate Ultra Petroleum a buy, 2 analysts rate it a sell, and 9 rate it a hold.

The average volume for Ultra Petroleum has been 2.0 million shares per day over the past 30 days. Ultra has a market cap of $2.1 billion and is part of the basic materials sector and energy industry. The stock has a beta of 2.28 and a short float of 21.1% with 14.58 days to cover. Shares are up 5.3% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Ultra Petroleum as a hold. The company's strengths can be seen in multiple areas, such as its notable return on equity, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and weak operating cash flow.

Highlights from the ratings report include:
  • Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ULTRA PETROLEUM CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for ULTRA PETROLEUM CORP is rather high; currently it is at 63.36%. Regardless of UPL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, UPL's net profit margin of 10.12% compares favorably 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 75.2% when compared to the same quarter one year ago, falling from $101.72 million to $25.19 million.
  • The debt-to-equity ratio is very high at 14.51 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 0.40, which clearly demonstrates the inability to cover short-term cash needs.

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