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3 Stocks Pushing The Services Sector 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 Services sector as a whole closed the day down 0.1% versus the S&P 500, which was unchanged. Laggards within the Services sector included Learning Tree International (LTRE), down 5.2%, Bowl America (BWL.A), down 6.4%, General Employment (JOB), down 5.2%, Nevada Gold & Casinos (UWN), down 2.9% and Peerless Systems (PRLS), down 1.6%.

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

Peerless Systems (PRLS) is one of the companies that pushed the Services sector lower today. Peerless Systems was down $0.06 (1.6%) to $3.66 on light volume. Throughout the day, 300 shares of Peerless Systems exchanged hands as compared to its average daily volume of 5,500 shares. The stock ranged in price between $3.65-$3.66 after having opened the day at $3.65 as compared to the previous trading day's close of $3.72.

Peerless Systems Corporation develops and licenses software-based digital imaging and networking systems and supporting electronic technologies to original equipment manufacturers (OEMs) of digital document products located primarily in the United States and Japan. Peerless Systems has a market cap of $10.1 million and is part of the leisure industry. Shares are up 2.2% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Peerless Systems 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 and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from TheStreet Ratings analysis on PRLS go as follows:

  • PRLS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 49.98, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for PEERLESS SYSTEMS CORP is currently very high, coming in at 85.74%. Regardless of PRLS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PRLS's net profit margin of 9.32% is significantly lower than the industry average.
  • 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 Software industry and the overall market, PEERLESS SYSTEMS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$0.93 million or 374.55% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

You can view the full analysis from the report here: Peerless Systems 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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