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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 0.6% versus the S&P 500, which was down 0.1%. Laggards within the Services sector included Discovery Communications ( DISCB), down 2.6%, QKL Stores ( QKLS), down 1.9%, Radio One ( ROIA), down 4.3%, Spar Group ( SGRP), down 3.6% and Sport Chalet ( SPCHA), down 2.8%.

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

Radio One ( ROIA) is one of the companies that pushed the Services sector lower today. Radio One was down $0.19 (4.3%) to $4.16 on average volume. Throughout the day, 2,386 shares of Radio One exchanged hands as compared to its average daily volume of 2,800 shares. The stock ranged in price between $4.16-$4.35 after having opened the day at $4.29 as compared to the previous trading day's close of $4.35.

Radio One, Inc., together with its subsidiaries, operates as an urban-oriented multi-media company in the United States. The company operates through four segments: Radio Broadcasting, Reach Media, Internet, and Cable Television. Radio One has a market cap of $10.5 million and is part of the transportation industry. Shares are up 14.5% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Radio One as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity and generally high debt management risk.

Highlights from TheStreet Ratings analysis on ROIA go as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Media industry. The net income has significantly decreased by 39.1% when compared to the same quarter one year ago, falling from -$18.11 million to -$25.18 million.
  • 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 Media industry and the overall market, RADIO ONE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The debt-to-equity ratio is very high at 15.39 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 2.68, which shows the ability to cover short-term cash needs.
  • The gross profit margin for RADIO ONE INC is rather high; currently it is at 68.24%. Regardless of ROIA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ROIA's net profit margin of -22.67% significantly underperformed when compared to the industry average.
  • RADIO ONE INC's earnings per share declined by 39.5% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, RADIO ONE INC continued to lose money by earning -$1.30 versus -$1.33 in the prior year.

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

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