Exterran Holdings (EXH) 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 Exterran Holdings ( EXH) 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 Exterran Holdings as such a stock due to the following factors:

  • EXH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $23.5 million.
  • EXH has traded 488,416 shares today.
  • EXH traded in a range 211.3% of the normal price range with a price range of $2.16.
  • EXH traded above its daily resistance level (quality: 11 days, meaning that the stock is crossing a resistance level set by the last 11 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 EXH:

Exterran Holdings, Inc., together with its subsidiaries, provides operations, maintenance, services, and equipment for the oil and natural gas production, processing, and transportation applications. The stock currently has a dividend yield of 2%. EXH has a PE ratio of 84. Currently there are 4 analysts that rate Exterran Holdings a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Exterran Holdings has been 753,700 shares per day over the past 30 days. Exterran has a market cap of $2.0 billion and is part of the basic materials sector and energy industry. The stock has a beta of 2.21 and a short float of 2.4% with 2.39 days to cover. Shares are down 9.6% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Exterran Holdings as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 0.9%. Since the same quarter one year prior, revenues rose by 13.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 149.82% to $134.63 million when compared to the same quarter last year. In addition, EXTERRAN HOLDINGS INC has also vastly surpassed the industry average cash flow growth rate of 13.33%.
  • 36.90% is the gross profit margin for EXTERRAN HOLDINGS INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 4.37% trails the industry average.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Energy Equipment & Services industry and the overall market, EXTERRAN HOLDINGS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Looking at the price performance of EXH's shares over the past 12 months, there is not much good news to report: the stock is down 31.95%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, EXH is still more expensive than most of the other companies in its industry.

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