Penn West is one of the largest conventional oil and natural gas producers in Canada. Penn West operates a significant portfolio of opportunities with a dominant position in light oil in Canada. Based in Calgary, Alberta, Penn West operates throughout western Canada on a land base encompassing over six million acres. Penn West Petroleum has finished its rebound and should now start a bearish trend.

From a fundamental viewpoint, analysts recently revised downward EPS estimates. From now on, Thomson Reuters consensus estimates a CAD 0.31 EPS for the current year and a CAD 0.57 EPS for the next year. On this basis, the security is currently trading respectively 42.37x and 23.15x its sales. There is a downside risk because of the negative momentum, poor fundamentals and reduced business predictability. Indeed, the company has an EV/Sales ratio of 3.11x.

Technically, in weekly data, the security has a bearish configuration under the CAD 22.4 pivot point. In the short term, the trend is still bearish under CAD 17.1, confirmed by the decreasing 20-day moving average situated at CAD 13.3. A comeback of prices close to this resistance area generates a downward risk.

Thanks to all these elements, most active investors can take a short position in Penn West Petroleum and anticipate a pullback toward CAD 12.55. A stop loss will be placed above the CAD 13.4 resistance.