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3 Stocks Pushing The Diversified Services Industry Lower

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

The Diversified Services industry as a whole closed the day down 0.6% versus the S&P 500, which was down 0.9%. Laggards within the Diversified Services industry included RLJ Entertainment ( RLJE), down 3.3%, UniTek Global Services ( UNTK), down 7.4%, MGT Capital Investments ( MGT), down 3.3%, AeroCentury ( ACY), down 2.7% and Hudson Global ( HSON), down 3.9%.

TheStreet Ratings Group would like to highlight 3 stocks that pushed the industry lower today:

AeroCentury ( ACY) is one of the companies that pushed the Diversified Services industry lower today. AeroCentury was down $0.45 (2.7%) to $16.05 on heavy volume. Throughout the day, 6,525 shares of AeroCentury exchanged hands as compared to its average daily volume of 3,800 shares. The stock ranged in price between $16.05-$17.05 after having opened the day at $16.87 as compared to the previous trading day's close of $16.50.

AeroCentury Corp. acquires and invests in used regional aircraft and aircraft engines for lease to regional carriers worldwide. As of February 28, 2014, the company owned 9 Bombardier Dash-8-300, 3 Bombardier CRJ-700, 7 Fokker 100, 3 Bombardier Dash-8-Q400, and 1 Bombardier CRJ-705 aircraft. AeroCentury has a market cap of $25.6 million and is part of the services sector. Shares are down 4.0% year-to-date as of the close of trading on Wednesday. Currently there is 1 analyst who rates AeroCentury a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates AeroCentury as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, generally high debt management risk, disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on ACY go as follows:

  • The debt-to-equity ratio is very high at 2.26 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • 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 Trading Companies & Distributors industry and the overall market, AEROCENTURY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • AEROCENTURY 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. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, AEROCENTURY CORP reported lower earnings of $1.86 versus $3.31 in the prior year. For the next year, the market is expecting a contraction of 114.0% in earnings (-$0.26 versus $1.86).
  • 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 Trading Companies & Distributors industry. The net income has significantly decreased by 90.3% when compared to the same quarter one year ago, falling from $3.82 million to $0.37 million.
  • The share price of AEROCENTURY CORP has not done very well: it is down 12.04% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.

You can view the full analysis from the report here: AeroCentury Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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