Magnum Hunter Resources Corporation (MHR) Stock: Weak On High Volume Today

Trade-Ideas LLC identified Magnum Hunter Resources Corporation ( MHR) as a weak 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 $3.8 million.
  • MHR has traded 625,589 shares today.
  • MHR is trading at 2.92 times the normal volume for the stock at this time of day.
  • MHR is trading at a new low 7.53% 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 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 3 rate it a hold.

The average volume for Magnum Hunter Resources Corporation has been 7.3 million shares per day over the past 30 days. Magnum Hunter has a market cap of $75.1 million and is part of the basic materials sector and energy industry. The stock has a beta of 1.98 and a short float of 34.2% with 4.99 days to cover. Shares are down 88.3% year-to-date as of the close of trading on Thursday.

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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 generally high debt management risk, disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • The debt-to-equity ratio is very high at 2.25 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 0.26, 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.
  • The gross profit margin for MAGNUM HUNTER RESOURCES CORP is currently lower than what is desirable, coming in at 32.47%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -54.83% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to $3.82 million or 74.28% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • MHR's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 92.13%, which is also worse than the performance of the S&P 500 Index. 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.

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