3 Stocks Pushing The Technology 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 Technology sector as a whole closed the day down 1.5% versus the S&P 500, which was up 0.6%. Laggards within the Technology sector included LookSmart ( LOOK), down 2.7%, BTU International ( BTUI), down 3.8%, Technical Communications ( TCCO), down 2.4%, Wells-Gardner Electronic ( WGA), down 2.3% and Kingtone Wirelessinfo Solution ( KONE), down 4.4%.

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

Wipro ( WIT) is one of the companies that pushed the Technology sector lower today. Wipro was down $0.23 (1.9%) to $11.54 on average volume. Throughout the day, 684,854 shares of Wipro exchanged hands as compared to its average daily volume of 581,700 shares. The stock ranged in price between $11.47-$11.77 after having opened the day at $11.75 as compared to the previous trading day's close of $11.77.

Wipro Limited provides information technology (IT) products and services worldwide. It operates in two segments, IT Services and IT Products. Wipro has a market cap of $29.3 billion and is part of the computer software & services industry. Shares are down 6.5% year-to-date as of the close of trading on Tuesday. Currently there are no analysts who rate Wipro a buy, 1 analyst rates it a sell, and 5 rate it a hold.

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TheStreet Ratings rates Wipro as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, increase in net income and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from TheStreet Ratings analysis on WIT go as follows:

  • The revenue growth greatly exceeded the industry average of 16.4%. Since the same quarter one year prior, revenues rose by 17.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • WIT's debt-to-equity ratio is very low at 0.15 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, WIT has a quick ratio of 1.91, which demonstrates the ability of the company to cover short-term liquidity needs.
  • WIPRO LTD has improved earnings per share by 49.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, WIPRO LTD increased its bottom line by earning $0.53 versus $0.41 in the prior year. This year, the market expects an improvement in earnings ($0.56 versus $0.53).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the IT Services industry average, but is less than that of the S&P 500. The net income increased by 23.9% when compared to the same quarter one year prior, going from $322.65 million to $399.85 million.
  • Powered by its strong earnings growth of 49.53% and other important driving factors, this stock has surged by 52.94% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

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

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At the close, BTU International ( BTUI) was down $0.10 (3.8%) to $2.55 on light volume. Throughout the day, 6,165 shares of BTU International exchanged hands as compared to its average daily volume of 9,500 shares. The stock ranged in price between $2.46-$2.66 after having opened the day at $2.60 as compared to the previous trading day's close of $2.65.

BTU International, Inc. designs, manufactures, sells, and services thermal processing equipment and related process controls for use in the electronics, alternative energy, automotive, and other industries worldwide. BTU International has a market cap of $26.2 million and is part of the computer software & services industry. Shares are down 9.0% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates BTU International as a sell. Among the areas we feel are negative, one of the most important has been an overall disappointing return on equity.

Highlights from TheStreet Ratings analysis on BTUI go as follows:

  • 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 Semiconductors & Semiconductor Equipment industry and the overall market, BTU INTERNATIONAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • BTU INTERNATIONAL INC has improved earnings per share by 42.4% 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, BTU INTERNATIONAL INC reported poor results of -$1.21 versus -$1.16 in the prior year.
  • Despite currently having a low debt-to-equity ratio of 0.44, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that BTUI's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.72 is high and demonstrates strong liquidity.
  • 35.59% is the gross profit margin for BTU INTERNATIONAL INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -15.28% is in-line with the industry average.
  • Compared to where it was a year ago today, 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: BTU International Ratings Report

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LookSmart ( LOOK) was another company that pushed the Technology sector lower today. LookSmart was down $0.04 (2.7%) to $1.54 on light volume. Throughout the day, 340 shares of LookSmart exchanged hands as compared to its average daily volume of 2,900 shares. The stock ranged in price between $1.54-$1.54 after having opened the day at $1.54 as compared to the previous trading day's close of $1.58.

LookSmart, Ltd. provides search and display advertising network solutions in the United States, Europe, the Middle East, and Africa. LookSmart has a market cap of $9.1 million and is part of the computer software & services industry. Shares are down 22.8% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates LookSmart as a sell. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.

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Highlights from TheStreet Ratings analysis on LOOK go as follows:

  • LOOK has underperformed the S&P 500 Index, declining 21.61% from its price level of one year ago. 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.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Internet Software & Services industry and the overall market, LOOKSMART LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • LOOK, with its very weak revenue results, has greatly underperformed against the industry average of 20.6%. Since the same quarter one year prior, revenues plummeted by 64.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Net operating cash flow has slightly increased to -$1.26 million or 6.52% when compared to the same quarter last year. Despite an increase in cash flow, LOOKSMART LTD's cash flow growth rate is still lower than the industry average growth rate of 22.53%.
  • The gross profit margin for LOOKSMART LTD is rather high; currently it is at 55.73%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -129.71% is in-line with the industry average.

You can view the full analysis from the report here: LookSmart 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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