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 0.7% versus the S&P 500, which was unchanged. Laggards within the Technology sector included Video Display ( VIDE), down 4.5%, BTU International ( BTUI), down 2.6%, Advanced Photonix ( API), down 9.6%, Nortech Systems ( NSYS), down 2.0% and Technical Communications ( TCCO), down 17.8%.

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

Splunk ( SPLK) is one of the companies that pushed the Technology sector lower today. Splunk was down $4.16 (8.6%) to $44.07 on heavy volume. Throughout the day, 5,172,614 shares of Splunk exchanged hands as compared to its average daily volume of 3,285,200 shares. The stock ranged in price between $43.96-$48.50 after having opened the day at $48.23 as compared to the previous trading day's close of $48.23.

Splunk, Inc. provides software solutions that provide real-time operational intelligence in the United States and internationally. Splunk has a market cap of $5.5 billion and is part of the computer software & services industry. Shares are down 29.8% year-to-date as of the close of trading on Monday. Currently there are 14 analysts who rate Splunk a buy, no analysts rate it a sell, and 6 rate it a hold.

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TheStreet Ratings rates Splunk as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income and feeble growth in its earnings per share.

Highlights from TheStreet Ratings analysis on SPLK go as follows:

  • 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 Software industry. The net income has significantly decreased by 429.6% when compared to the same quarter one year ago, falling from -$6.16 million to -$32.63 million.
  • SPLUNK 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, SPLUNK INC reported poor results of -$0.75 versus -$0.39 in the prior year. This year, the market expects an improvement in earnings ($0.00 versus -$0.75).
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Software industry and the overall market, SPLUNK INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for SPLUNK INC is currently very high, coming in at 90.99%. Regardless of SPLK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SPLK's net profit margin of -32.66% significantly underperformed when compared to the industry average.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in 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: Splunk Ratings Report

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At the close, Advanced Photonix ( API) was down $0.05 (9.6%) to $0.47 on average volume. Throughout the day, 53,645 shares of Advanced Photonix exchanged hands as compared to its average daily volume of 53,500 shares. The stock ranged in price between $0.45-$0.49 after having opened the day at $0.48 as compared to the previous trading day's close of $0.52.

Advanced Photonix, Inc. engages in the development, manufacture, and sale of optoelectronic devices, and sub-systems and systems to various original equipment manufacturers primarily in North America, Asia, Europe, and Australia. Advanced Photonix has a market cap of $15.5 million and is part of the computer software & services industry. Shares are down 28.1% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate Advanced Photonix a buy, no analysts rate it a sell, and 1 rates it a hold.

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TheStreet Ratings rates Advanced Photonix as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from TheStreet Ratings analysis on API go as follows:

  • 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 Electronic Equipment, Instruments & Components industry. The net income has significantly decreased by 57.9% when compared to the same quarter one year ago, falling from -$1.03 million to -$1.62 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 Electronic Equipment, Instruments & Components industry and the overall market, ADVANCED PHOTONIX INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • In its most recent trading session, API has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.
  • ADVANCED PHOTONIX 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ADVANCED PHOTONIX INC reported poor results of -$0.13 versus -$0.07 in the prior year. This year, the market expects an improvement in earnings (-$0.05 versus -$0.13).
  • The current debt-to-equity ratio, 0.34, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that API's debt-to-equity ratio is low, the quick ratio, which is currently 0.62, displays a potential problem in covering short-term cash needs.

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

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BTU International ( BTUI) was another company that pushed the Technology sector lower today. BTU International was down $0.07 (2.6%) to $2.57 on light volume. Throughout the day, 528 shares of BTU International exchanged hands as compared to its average daily volume of 9,300 shares. The stock ranged in price between $2.52-$2.57 after having opened the day at $2.53 as compared to the previous trading day's close of $2.64.

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 $23.9 million and is part of the computer software & services industry. Shares are down 12.3% year-to-date as of the close of trading on Monday.

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.

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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.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in 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.
  • 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.

You can view the full analysis from the report here: BTU International 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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