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3 Stocks Pushing The Health Care 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 Health Care sector as a whole closed the day up 0.7% versus the S&P 500, which was down 0.3%. Laggards within the Health Care sector included XTL Biopharmaceuticals ( XTLB), down 1.8%, China Pharma ( CPHI), down 9.1%, Electromed ( ELMD), down 2.1%, American Shared Hospital Services ( AMS), down 2.8% and Misonix ( MSON), down 5.9%.

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

Electromed ( ELMD) is one of the companies that pushed the Health Care sector lower today. Electromed was down $0.03 (2.1%) to $1.40 on light volume. Throughout the day, 500 shares of Electromed exchanged hands as compared to its average daily volume of 24,500 shares. The stock ranged in price between $1.40-$1.40 after having opened the day at $1.40 as compared to the previous trading day's close of $1.43.

Electromed, Inc. develops, manufactures, markets, and sells airway clearance therapy products. Electromed has a market cap of $11.3 million and is part of the drugs industry. Shares are down 57.9% year-to-date as of the close of trading on Monday. Currently there is 1 analyst who rates Electromed a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Electromed 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 and disappointing return on equity.

Highlights from TheStreet Ratings analysis on ELMD go as follows:

  • ELECTROMED INC 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 two years. We anticipate that this should continue in the coming year. During the past fiscal year, ELECTROMED INC swung to a loss, reporting -$0.16 versus $0.02 in the prior year. For the next year, the market is expecting a contraction of 18.8% in earnings (-$0.19 versus -$0.16).
  • 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 Health Care Equipment & Supplies industry. The net income has significantly decreased by 132.9% when compared to the same quarter one year ago, falling from -$0.43 million to -$1.00 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, ELECTROMED INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ELECTROMED INC is rather high; currently it is at 68.31%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, ELMD's net profit margin of -25.37% significantly underperformed when compared to the industry average.
  • Compared to where it was a year ago, the stock is now trading at a higher level, and has traded in line with the S&P 500. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.

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

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