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 Computer Software & Services industry as a whole closed the day down 1.0% versus the S&P 500, which was up 0.1%. Laggards within the Computer Software & Services industry included TigerLogic ( TIGR), down 2.4%, Intelligent Systems ( INS), down 2.8%, CounterPath ( CPAH), down 3.1%, Konami ( KNM), down 1.9% and MGT Capital Investments ( MGT), down 3.8%. TheStreet Ratings Group would like to highlight 3 stocks that pushed the industry lower today: Splunk ( SPLK) is one of the companies that pushed the Computer Software & Services industry lower today. Splunk was down $8.06 (16.1%) to $41.98 on heavy volume. Throughout the day, 18,106,181 shares of Splunk exchanged hands as compared to its average daily volume of 3,805,900 shares. The stock ranged in price between $41.05-$47.00 after having opened the day at $46.92 as compared to the previous trading day's close of $50.04. Splunk, Inc. provides software solutions that provide real-time operational intelligence in the United States and internationally. Splunk has a market cap of $5.8 billion and is part of the technology sector. Shares are down 27.1% year-to-date as of the close of trading on Thursday. Currently there are 15 analysts who rate Splunk a buy, no analysts rate it a sell, and 5 rate it a hold. STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more. 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).
- In its most recent trading session, SPLK 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. 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.
- 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.
- KNM's revenue growth has slightly outpaced the industry average of 6.7%. Since the same quarter one year prior, revenues rose by 14.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- KNM's debt-to-equity ratio is very low at 0.19 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, KNM has a quick ratio of 1.74, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for KONAMI CORP is currently lower than what is desirable, coming in at 32.43%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.93% significantly trails the industry average.
- Net operating cash flow has decreased to $47.94 million or 37.60% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.