Barbarian At The Gate: PDC Energy (PDCE)

Trade-Ideas LLC identified PDC Energy ( PDCE) 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 PDC Energy as such a stock due to the following factors:

  • PDCE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $65.9 million.
  • PDCE has traded 967,904 shares today.
  • PDCE traded in a range 211.8% of the normal price range with a price range of $3.89.
  • PDCE traded above its daily resistance level (quality: 62 days, meaning that the stock is crossing a resistance level set by the last 62 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 PDCE:

PDC Energy, Inc., an independent exploration and production company, acquires, explores for, develops, and produces crude oil, natural gas, and natural gas liquids in the United States. It operates through two segments, Oil and Gas Exploration and Production, and Gas Marketing. Currently there are 14 analysts that rate PDC Energy a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for PDC Energy has been 1.1 million shares per day over the past 30 days. PDC Energy has a market cap of $2.4 billion and is part of the basic materials sector and energy industry. The stock has a beta of 0.51 and a short float of 13.3% with 4.85 days to cover. Shares are up 2.6% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates PDC Energy as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • The current debt-to-equity ratio, 0.40, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.18, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has increased to $101.15 million or 23.53% when compared to the same quarter last year. In addition, PDC ENERGY INC has also vastly surpassed the industry average cash flow growth rate of -49.98%.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • 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. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, PDC ENERGY INC's return on equity has significantly outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • 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 519.2% when compared to the same quarter one year ago, falling from $17.06 million to -$71.53 million.

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