The chart of VNR is not encouraging for the bulls. Prices have trended sideways the past three months after being cut to almost $5 from $15 in less than two months. That sort of markdown has sometimes attracted bargain hunters, but not in this case with the On-Balance-Volume (OBV) line remaining flat. The 50-day moving average is still in a downward trend and our momentum study is not foreshadowing a rally.
One of the strengths of Japanese candlestick charts, see above, is that they can show reversals quickly, sometimes in one or two sessions. Unfortunately, we have yet to find a reversal pattern on VNR.
TheStreet Ratings team rates VANGUARD NATURAL RESOURCES as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
We rate VANGUARD NATURAL RESOURCES (VNR) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, generally high debt management risk, disappointing return on equity and weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- VANGUARD NATURAL RESOURCES 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 year. We anticipate that this should continue in the coming year. During the past fiscal year, VANGUARD NATURAL RESOURCES reported lower earnings of $0.54 versus $0.75 in the prior year. For the next year, the market is expecting a contraction of 59.3% in earnings ($0.22 versus $0.54).
- 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 16650.6% when compared to the same quarter one year ago, falling from -$4.74 million to -$793.65 million.
- The debt-to-equity ratio is very high at 3.28 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, VNR has a quick ratio of 0.60, this demonstrates the lack of ability of the company to cover short-term liquidity 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, VANGUARD NATURAL RESOURCES's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $51.07 million or 32.15% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, VANGUARD NATURAL RESOURCES has marginally lower results.
- You can view the full analysis from the report here: VNR