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Actionable news in REN: RESOLUTE ENERGY Corp,

Resolute Energy Is Way Too High

Summary

REN saw two periods of explosive growth supported by a rally in crude oil spot prices.

Fundamentally, REN's income has been horrible over the past six quarters posting six straight losses.

REN needs oil prices at $60 to reduce net-debt-to-EBITDA to below 2.0x by 2018.

Oil is making moves once again and that means small-cap energy trading has increased in hopes of making a profit off of cheap shares. Naturally, this leads to some opportunities to short companies that are overvalued and misrepresented by commodity sentiment. Resolute Energy Corporation's (NYSE:REN) rapid rise to new highs suggest the existence of a bubble in its share price. After starting July below $4, two bullish events, analyst upgrades and a crude oil rally, REN stock traded as high as $20 a growth of almost 500 percent. Based on fundamentals, REN has no business growing at the speed which it did in the past two months. Two bearish technical indications from the RSI and MACD charts signal an opportunity for bears to jump on this short opportunity.

REN has posted 6 straight losses over the past year and a half with an annual net loss for 2015 reported at -$742.5 million. The company is bleeding money due to low oil prices and high debt levels. So far, EBITDA in the first half of 2016 is at $50.8 million, down 28 percent from the first half of 2015. Revenue fell on lower average prices as a result of a WTI downtrend. REN's year-to-date realization average is well below current price levels. For oil, a $39.75 average price was reported, and for natural gas, a $1.49 average price was reported. Both of these numbers are down 29 percent and 39 percent respectively. So while the recent crude rebound would relieve some...


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