3 Stocks Pushing The Utilities Sector Lower

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The Utilities sector as a whole closed the day down 0.5% versus the S&P 500, which was down 0.3%. Laggards within the Utilities sector included Ellomay Capital ( ELLO), down 2.4%, Centrais Eletricas Brasileiras ( EBR.B), down 2.7%, Southcross Energy Partners ( SXE), down 2.8%, Otter Tail ( OTTR), down 2.5% and Atlantic Power ( AT), down 2.8%.

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

Otter Tail ( OTTR) is one of the companies that pushed the Utilities sector lower today. Otter Tail was down $0.75 (2.5%) to $28.79 on average volume. Throughout the day, 122,809 shares of Otter Tail exchanged hands as compared to its average daily volume of 103,900 shares. The stock ranged in price between $28.75-$29.51 after having opened the day at $29.49 as compared to the previous trading day's close of $29.54.

Otter Tail Corporation is engaged in electric and nonelectric operations primarily in the United States, Canada, and Mexico. It operates in four segments: Electric, Manufacturing, Plastics, and Construction. Otter Tail has a market cap of $1.1 billion and is part of the utilities industry. Shares are up 0.9% year-to-date as of the close of trading on Tuesday. Currently there are no analysts who rate Otter Tail a buy, no analysts rate it a sell, and 2 rate it a hold.

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

Highlights from TheStreet Ratings analysis on OTTR go as follows:

  • OTTER TAIL CORP has improved earnings per share by 43.9% 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, OTTER TAIL CORP increased its bottom line by earning $1.38 versus $1.07 in the prior year. This year, the market expects an improvement in earnings ($1.75 versus $1.38).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Electric Utilities industry average. The net income increased by 39.5% when compared to the same quarter one year prior, rising from $15.36 million to $21.43 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.4%. Since the same quarter one year prior, revenues rose by 10.3%. 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 0.93, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that OTTR's debt-to-equity ratio is low, the quick ratio, which is currently 0.68, displays a potential problem in covering short-term cash needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Electric Utilities industry and the overall market on the basis of return on equity, OTTER TAIL CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

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

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At the close, Southcross Energy Partners ( SXE) was down $0.53 (2.8%) to $18.50 on average volume. Throughout the day, 72,173 shares of Southcross Energy Partners exchanged hands as compared to its average daily volume of 84,900 shares. The stock ranged in price between $18.35-$19.05 after having opened the day at $19.00 as compared to the previous trading day's close of $19.03.

Southcross Energy Partners, L.P., together with its subsidiaries, provides natural gas gathering, processing, treating, compression, and transportation services in the United States. It also offers natural gas liquid (NGL) fractionation and transportation services. Southcross Energy Partners has a market cap of $410.4 million and is part of the utilities industry. Shares are up 5.5% year-to-date as of the close of trading on Tuesday. Currently there is 1 analyst who rates Southcross Energy Partners a buy, no analysts rate it a sell, and 5 rate it a hold.

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TheStreet Ratings rates Southcross Energy Partners as a sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and poor profit margins.

Highlights from TheStreet Ratings analysis on SXE go as follows:

  • SXE has underperformed the S&P 500 Index, declining 13.46% 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 gross profit margin for SOUTHCROSS ENERGY PRTNRS LP is currently extremely low, coming in at 4.93%. Regardless of SXE's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -0.60% trails the industry average.
  • 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 Oil, Gas & Consumable Fuels industry and the overall market, SOUTHCROSS ENERGY PRTNRS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The current debt-to-equity ratio, 0.38, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.88 is somewhat weak and could be cause for future problems.
  • Net operating cash flow has significantly increased by 928.52% to $14.18 million when compared to the same quarter last year. In addition, SOUTHCROSS ENERGY PRTNRS LP has also vastly surpassed the industry average cash flow growth rate of 17.43%.

You can view the full analysis from the report here: Southcross Energy Partners Ratings Report

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Centrais Eletricas Brasileiras ( EBR.B) was another company that pushed the Utilities sector lower today. Centrais Eletricas Brasileiras was down $0.13 (2.7%) to $4.74 on light volume. Throughout the day, 52,117 shares of Centrais Eletricas Brasileiras exchanged hands as compared to its average daily volume of 266,200 shares. The stock ranged in price between $4.73-$4.92 after having opened the day at $4.89 as compared to the previous trading day's close of $4.87.

Centrais Eletricas Brasileiras S.A. - Eletrobras, together with its subsidiaries, generates, transmits, and distributes electricity in Brazil. It projects, builds, and operates generating power plants, and electric power transmission and distribution lines. Centrais Eletricas Brasileiras has a market cap of $6.4 billion and is part of the utilities industry. Shares are up 10.7% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Centrais Eletricas Brasileiras as a sell. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow, generally disappointing historical performance in the stock itself and poor profit margins.

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Highlights from TheStreet Ratings analysis on EBR.B go as follows:

  • Net operating cash flow has significantly decreased to $758.05 million or 58.45% 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, EBR.B 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.
  • The gross profit margin for ELETROBRAS-CENTR ELETR BRAS is currently lower than what is desirable, coming in at 27.17%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, EBR.B's net profit margin of 14.06% compares favorably to the industry average.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Electric Utilities industry and the overall market, ELETROBRAS-CENTR ELETR BRAS's return on equity significantly trails that of both the industry average and the S&P 500.
  • The current debt-to-equity ratio, 0.58, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.96 is somewhat weak and could be cause for future problems.

You can view the full analysis from the report here: Centrais Eletricas Brasileiras 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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