3 Stocks Boosting The Diversified Services Industry Higher

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.

All three major indices are trading down today with the Dow Jones Industrial Average ( ^DJI) trading down 127.73 points (-0.8%) at 16,384 as of Tuesday, May 20, 2014, 3:55 PM ET. The NYSE advances/declines ratio sits at 774 issues advancing vs. 2,216 declining with 147 unchanged.

The Diversified Services industry as a whole closed the day down 1.1% versus the S&P 500, which was down 0.5%. Top gainers within the Diversified Services industry included DLH Holdings ( DLHC), up 3.8%, PDI ( PDII), up 3.3%, Industrial Services of America ( IDSA), up 4.2%, General Finance ( GFN), up 3.2% and Swisher Hygiene ( SWSH), up 3.9%.

TheStreet Ratings Group would like to highlight 3 stocks pushing the industry higher today:

General Finance ( GFN) is one of the companies that pushed the Diversified Services industry higher today. General Finance was up $0.26 (3.2%) to $8.47 on light volume. Throughout the day, 19,387 shares of General Finance exchanged hands as compared to its average daily volume of 28,400 shares. The stock ranged in a price between $8.15-$8.49 after having opened the day at $8.15 as compared to the previous trading day's close of $8.21.

General Finance Corporation, through its subsidiaries, leases and sells portable storage containers, portable container buildings, and freight containers. General Finance has a market cap of $208.8 million and is part of the services sector. Shares are up 35.3% year-to-date as of the close of trading on Monday. Currently there are 3 analysts who rate General Finance a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates General Finance as a hold. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, compelling growth in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and disappointing return on equity.

Highlights from TheStreet Ratings analysis on GFN go as follows:

  • GENERAL FINANCE CORP/DE has improved earnings per share by 33.3% 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, GENERAL FINANCE CORP/DE increased its bottom line by earning $0.16 versus $0.11 in the prior year. This year, the market expects an improvement in earnings ($0.17 versus $0.16).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Trading Companies & Distributors industry. The net income increased by 165.0% when compared to the same quarter one year prior, rising from $0.75 million to $1.99 million.
  • Powered by its strong earnings growth of 33.33% and other important driving factors, this stock has surged by 88.94% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • The debt-to-equity ratio of 1.48 is relatively high when compared with the industry average, suggesting a need for better debt level management.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Trading Companies & Distributors industry and the overall market, GENERAL FINANCE CORP/DE's return on equity significantly trails that of both the industry average and the S&P 500.

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

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At the close, Industrial Services of America ( IDSA) was up $0.19 (4.2%) to $4.77 on light volume. Throughout the day, 5,751 shares of Industrial Services of America exchanged hands as compared to its average daily volume of 13,800 shares. The stock ranged in a price between $4.58-$4.85 after having opened the day at $4.58 as compared to the previous trading day's close of $4.58.

Industrial Services of America, Inc. operates as a recycler of stainless steel, ferrous, and non-ferrous scrap. The company operates in two segments, Recycling and Waste Services. Industrial Services of America has a market cap of $32.3 million and is part of the services sector. Shares are up 44.2% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate Industrial Services of America a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Industrial Services of America as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from TheStreet Ratings analysis on IDSA go as follows:

  • INDUSTRIAL SERVICES AMER 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. During the past fiscal year, INDUSTRIAL SERVICES AMER INC reported poor results of -$1.96 versus -$0.96 in the prior year.
  • 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 Commercial Services & Supplies industry. The net income has significantly decreased by 128.1% when compared to the same quarter one year ago, falling from -$4.50 million to -$10.27 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 Commercial Services & Supplies industry and the overall market, INDUSTRIAL SERVICES AMER INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for INDUSTRIAL SERVICES AMER INC is currently extremely low, coming in at 0.11%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -35.96% is significantly below that of the industry average.
  • IDSA, with its decline in revenue, underperformed when compared the industry average of 3.9%. Since the same quarter one year prior, revenues fell by 22.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

You can view the full analysis from the report here: Industrial Services of 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.

PDI ( PDII) was another company that pushed the Diversified Services industry higher today. PDI was up $0.15 (3.3%) to $4.66 on light volume. Throughout the day, 398 shares of PDI exchanged hands as compared to its average daily volume of 9,900 shares. The stock ranged in a price between $4.45-$4.66 after having opened the day at $4.45 as compared to the previous trading day's close of $4.51.

PDI, Inc. provides outsourced commercial services to pharmaceutical, biotechnology, and healthcare companies in the United States. PDI has a market cap of $68.2 million and is part of the services sector. Shares are down 6.2% year-to-date as of the close of trading on Monday. Currently there is 1 analyst who rates PDI a buy, no analysts rate it a sell, and 1 rates it a hold.

TheStreet Ratings rates PDI as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, poor profit margins, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from TheStreet Ratings analysis on PDII 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 Health Care Providers & Services industry. The net income has significantly decreased by 175.8% when compared to the same quarter one year ago, falling from $2.13 million to -$1.61 million.
  • The gross profit margin for PDI INC is rather low; currently it is at 16.98%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -4.91% trails that of the industry average.
  • Net operating cash flow has significantly decreased to -$6.46 million or 628.88% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • In its most recent trading session, PDII 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.
  • PDI 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. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, PDI INC continued to lose money by earning -$0.31 versus -$1.75 in the prior year. For the next year, the market is expecting a contraction of 35.5% in earnings (-$0.42 versus -$0.31).

You can view the full analysis from the report here: PDI 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.

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.

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