Ensco (ESV) In A Perilous Reversal

Trade-Ideas LLC identified Ensco ( ESV) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Ensco as such a stock due to the following factors:

  • ESV has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $74.8 million.
  • ESV has traded 1.6 million shares today.
  • ESV is down 3% today.
  • ESV was up 6.6% yesterday.

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More details on ESV:

Ensco plc provides offshore contract drilling services to the oil and gas industry worldwide. It operates through three segments: Floaters, Jackups, and Other. The stock currently has a dividend yield of 0.5%. Currently there are no analysts that rate Ensco a buy, 5 analysts rate it a sell, and 12 rate it a hold.

The average volume for Ensco has been 7.8 million shares per day over the past 30 days. Ensco has a market cap of $2.6 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.69 and a short float of 8.6% with 2.15 days to cover. Shares are down 40.4% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Ensco as a sell. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • ESV'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 50.06%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. 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.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Energy Equipment & Services industry and the overall market on the basis of return on equity, ENSCO PLC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • ESV, with its decline in revenue, underperformed when compared the industry average of 21.6%. Since the same quarter one year prior, revenues fell by 33.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The gross profit margin for ENSCO PLC is rather high; currently it is at 50.30%. Regardless of ESV's high profit margin, it has managed to decrease from the same period last year.
  • Net operating cash flow has increased to $562.90 million or 31.58% when compared to the same quarter last year. In addition, ENSCO PLC has also vastly surpassed the industry average cash flow growth rate of -43.35%.

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