AOL Inc. (AOL): Today's Featured Internet Laggard

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

AOL ( AOL) pushed the Internet industry lower today making it today's featured Internet laggard. The industry as a whole closed the day down 0.1%. By the end of trading, AOL fell 49 cents (-1.4%) to $35.78 on light volume. Throughout the day, 1.1 million shares of AOL exchanged hands as compared to its average daily volume of two million shares. The stock ranged in price between $35.77-$37.83 after having opened the day at $37.52 as compared to the previous trading day's close of $36.27. Other companies within the Internet industry that declined today were: Remark Media ( MARK), down 9.4%, Sify Technologies ( SIFY), down 8.3%, LiveDeal ( LIVE), down 3.4%, and Zynga Inc Class A ( ZNGA), down 3.3%.
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AOL Inc. operates as a Web services company that offers a suite of brands and offerings for the worldwide audience. Its business spans online content, products, and services for consumers, publishers, and advertisers. AOL has a market cap of $3.42 billion and is part of the technology sector. The company has a P/E ratio of 3.4, equal to the average internet industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Shares are up 140.4% year to date as of the close of trading on Friday. Currently there are five analysts that rate AOL a buy, one analyst rates it a sell, and five rate it a hold.

TheStreet Ratings rates AOL as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

On the positive front, ( ACOM), up 8%, Opentable ( OPEN), up 6.3%, Vipshop Holdings Ltd ADR ( VIPS), up 5.5%, and Commtouch Software ( CTCH), up 4.4%, were all gainers within the internet industry with Baidu ( BIDU) being today's featured internet industry leader.

For investors not wanting singular stock exposure, ETFs may be of interest. Investors who are bullish on the internet industry could consider First Trust Dow Jones Internet Idx ( FDN) while those bearish on the internet industry could consider ProShares Ultra Short Technology ( REW).

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