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 0.7% versus the S&P 500, which was unchanged. Laggards within the Services sector included Bowl America ( BWL.A), down 6.3%, Birks Group ( BGI), down 1.9%, Haverty Furniture Companies ( HVT.A), down 3.4%, Sino-Global Shipping America ( SINO), down 7.9% and QKL Stores ( QKLS), down 4.8%.

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

DXP ( DXPE) is one of the companies that pushed the Services sector lower today. DXP was down $42.79 (39.3%) to $66.13 on heavy volume. Throughout the day, 2,830,390 shares of DXP exchanged hands as compared to its average daily volume of 88,300 shares. The stock ranged in price between $66.00-$88.39 after having opened the day at $88.20 as compared to the previous trading day's close of $108.92.

DXP Enterprises, Inc. is engaged in distributing maintenance, repair, and operating (MRO) products, equipment, and services to industrial customers in the United States. It operates through three segments: Service Centers, Supply Chain Services, and Innovative Pumping Solutions. DXP has a market cap of $1.6 billion and is part of the wholesale industry. Shares are down 5.5% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate DXP a buy, no analysts rate it a sell, and 1 rates it a hold.

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TheStreet Ratings rates DXP 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, compelling growth in net income and solid stock price performance. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from TheStreet Ratings analysis on DXPE go as follows:

  • DXPE's revenue growth has slightly outpaced the industry average of 2.3%. Since the same quarter one year prior, revenues slightly increased by 7.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.66, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.33, which illustrates the ability to avoid short-term cash problems.
  • DXP ENTERPRISES INC has improved earnings per share by 19.6% 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, DXP ENTERPRISES INC increased its bottom line by earning $3.94 versus $3.35 in the prior year. This year, the market expects an improvement in earnings ($5.19 versus $3.94).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Trading Companies & Distributors industry average, but is less than that of the S&P 500. The net income increased by 20.1% when compared to the same quarter one year prior, going from $14.07 million to $16.90 million.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 85.08% over the past year, a rise that has exceeded that of the S&P 500 Index. 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: DXP Ratings Report

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At the close, QKL Stores ( QKLS) was down $0.19 (4.8%) to $3.71 on average volume. Throughout the day, 3,588 shares of QKL Stores exchanged hands as compared to its average daily volume of 4,600 shares. The stock ranged in price between $3.55-$3.88 after having opened the day at $3.65 as compared to the previous trading day's close of $3.90.

QKL Stores Inc., through its subsidiaries, engages in the operation of retail chain stores in the People's Republic of China. The company's supermarkets and hypermarkets sell a selection of merchandise, including groceries, fresh food, and non-food items. QKL Stores has a market cap of $5.9 million and is part of the wholesale industry. Shares are down 7.2% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates QKL Stores as a sell. The company's weaknesses can be seen in multiple areas, such as its poor profit margins, weak operating cash flow and generally high debt management risk.

Highlights from TheStreet Ratings analysis on QKLS go as follows:

  • The gross profit margin for QKL STORES INC is rather low; currently it is at 16.99%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -17.12% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$41.03 million or 184.97% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • QKLS's debt-to-equity ratio of 0.76 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.32 is very low and demonstrates very weak liquidity.
  • 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 Food & Staples Retailing industry and the overall market, QKL STORES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • QKLS, with its decline in revenue, underperformed when compared the industry average of 5.1%. Since the same quarter one year prior, revenues fell by 21.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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

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Sino-Global Shipping America ( SINO) was another company that pushed the Services sector lower today. Sino-Global Shipping America was down $0.18 (7.9%) to $2.11 on average volume. Throughout the day, 7,930 shares of Sino-Global Shipping America exchanged hands as compared to its average daily volume of 6,000 shares. The stock ranged in price between $2.06-$2.24 after having opened the day at $2.24 as compared to the previous trading day's close of $2.29.

Sino-Global Shipping America, Ltd. provides shipping agency services for ships coming to and departing from Chinese ports. Sino-Global Shipping America has a market cap of $10.6 million and is part of the wholesale industry. Shares are down 8.4% year-to-date as of the close of trading on Monday. Currently there is 1 analyst who rates Sino-Global Shipping America a buy, 1 analyst rates it a sell, and none rate it a hold.

TheStreet Ratings rates Sino-Global Shipping America as a sell. Among the areas we feel are negative, one of the most important has been poor profit margins.

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Highlights from TheStreet Ratings analysis on SINO go as follows:

  • The gross profit margin for SINO-GLOBAL SHIPPING AMERICA is currently lower than what is desirable, coming in at 31.47%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 20.22% trails the industry average.
  • 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 Transportation Infrastructure industry and the overall market, SINO-GLOBAL SHIPPING AMERICA's return on equity significantly trails that of both the industry average and the S&P 500.
  • SINO, with its very weak revenue results, has greatly underperformed against the industry average of 9.3%. Since the same quarter one year prior, revenues plummeted by 61.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • SINO-GLOBAL SHIPPING AMERICA reported significant earnings per share improvement 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 year. During the past fiscal year, SINO-GLOBAL SHIPPING AMERICA continued to lose money by earning -$0.39 versus -$0.61 in the prior year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Transportation Infrastructure industry. The net income increased by 271.2% when compared to the same quarter one year prior, rising from -$0.29 million to $0.50 million.

You can view the full analysis from the report here: Sino-Global Shipping America 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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