Today's Weak On High Volume Stock: Precision Drilling (PDS)

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

  • PDS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $22.1 million.
  • PDS has traded 351,426 shares today.
  • PDS is trading at 3.21 times the normal volume for the stock at this time of day.
  • PDS is trading at a new low 7.13% 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 PDS:

Precision Drilling Corporation provides oil and natural gas drilling and related services and products. The company operates through two segments, Contract Drilling Services; and Completion and Production Services. The stock currently has a dividend yield of 7.7%. Currently there are 4 analysts that rate Precision Drilling a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Precision Drilling has been 3.1 million shares per day over the past 30 days. Precision has a market cap of $1.4 billion and is part of the basic materials sector and energy industry. Shares are up 21.1% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Precision Drilling as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • PRECISION DRILLING CORP 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. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, PRECISION DRILLING CORP swung to a loss, reporting -$1.25 versus $0.12 in the prior year.
  • The debt-to-equity ratio of 1.03 is relatively high when compared with the industry average, suggesting a need for better debt level management.
  • 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 Energy Equipment & Services industry and the overall market, PRECISION DRILLING CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $70.95 million or 47.39% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, PRECISION DRILLING CORP has marginally lower results.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 32.24%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 138.46% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

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