3 Stocks Pushing The Diversified Services Industry Lower

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The Diversified Services industry as a whole closed the day down 0.3% versus the S&P 500, which was down 0.1%. Laggards within the Diversified Services industry included General Employment ( JOB), down 7.7%, Onvia ( ONVI), down 2.2%, VirtualScopics ( VSCP), down 5.0%, EnviroStar ( EVI), down 2.8% and AeroCentury ( ACY), down 2.4%.

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

TAL Education Group ( XRS) is one of the companies that pushed the Diversified Services industry lower today. TAL Education Group was down $0.95 (3.4%) to $26.79 on average volume. Throughout the day, 418,588 shares of TAL Education Group exchanged hands as compared to its average daily volume of 549,100 shares. The stock ranged in price between $26.74-$28.25 after having opened the day at $27.71 as compared to the previous trading day's close of $27.74.

TAL Education Group, together with its subsidiaries, provides K-12 after-school tutoring services under the Xueersi brand name in China. TAL Education Group has a market cap of $2.1 billion and is part of the services sector. Shares are up 26.1% year-to-date as of the close of trading on Wednesday. Currently there are 3 analysts who rate TAL Education Group a buy, no analysts rate it a sell, and 1 rates it a hold.

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TheStreet Ratings rates TAL Education Group as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, expanding profit margins and impressive record of earnings per share growth. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from TheStreet Ratings analysis on XRS go as follows:

  • The revenue growth greatly exceeded the industry average of 1.5%. Since the same quarter one year prior, revenues rose by 45.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • XRS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, XRS has a quick ratio of 1.70, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to the other companies in the Diversified Consumer Services industry and the overall market, TAL EDUCATION GROUP's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • The gross profit margin for TAL EDUCATION GROUP is rather high; currently it is at 53.14%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 19.20% is above that of the industry average.
  • TAL EDUCATION GROUP 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 two years. We feel that this trend should continue. During the past fiscal year, TAL EDUCATION GROUP increased its bottom line by earning $0.75 versus $0.43 in the prior year. This year, the market expects an improvement in earnings ($1.03 versus $0.75).

You can view the full analysis from the report here: TAL Education Group Ratings Report

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At the close, AeroCentury ( ACY) was down $0.39 (2.4%) to $15.88 on light volume. Throughout the day, 1,284 shares of AeroCentury exchanged hands as compared to its average daily volume of 3,300 shares. The stock ranged in price between $15.84-$16.05 after having opened the day at $16.05 as compared to the previous trading day's close of $16.27.

AeroCentury Corp. acquires and invests in used regional aircraft and aircraft engines for lease to regional carriers worldwide. As of February 28, 2014, the company owned 9 Bombardier Dash-8-300, 3 Bombardier CRJ-700, 7 Fokker 100, 3 Bombardier Dash-8-Q400, and 1 Bombardier CRJ-705 aircraft. AeroCentury has a market cap of $25.7 million and is part of the services sector. Shares are down 5.3% year-to-date as of the close of trading on Wednesday. Currently there is 1 analyst who rates AeroCentury a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates AeroCentury 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, generally high debt management risk, disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on ACY go as follows:

  • The debt-to-equity ratio is very high at 2.26 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • 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 Trading Companies & Distributors industry and the overall market, AEROCENTURY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • AEROCENTURY CORP 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. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, AEROCENTURY CORP reported lower earnings of $1.86 versus $3.31 in the prior year. For the next year, the market is expecting a contraction of 72.6% in earnings ($0.51 versus $1.86).
  • 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 Trading Companies & Distributors industry. The net income has significantly decreased by 90.3% when compared to the same quarter one year ago, falling from $3.82 million to $0.37 million.
  • The share price of AEROCENTURY CORP has not done very well: it is down 13.16% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.

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

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VirtualScopics ( VSCP) was another company that pushed the Diversified Services industry lower today. VirtualScopics was down $0.25 (5.0%) to $4.72 on heavy volume. Throughout the day, 14,538 shares of VirtualScopics exchanged hands as compared to its average daily volume of 6,600 shares. The stock ranged in price between $4.70-$4.97 after having opened the day at $4.97 as compared to the previous trading day's close of $4.97.

VirtualScopics, Inc. provides imaging solutions for the pharmaceutical, biotechnology, and medical device industries. VirtualScopics has a market cap of $14.2 million and is part of the services sector. Shares are up 43.6% year-to-date as of the close of trading on Wednesday. Currently there is 1 analyst who rates VirtualScopics a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates VirtualScopics 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 VSCP go as follows:

  • The gross profit margin for VIRTUALSCOPICS INC is currently lower than what is desirable, coming in at 32.24%. Regardless of VSCP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, VSCP's net profit margin of -27.44% significantly underperformed when compared to 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 Life Sciences Tools & Services industry and the overall market, VIRTUALSCOPICS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • VSCP, with its decline in revenue, underperformed when compared the industry average of 18.7%. Since the same quarter one year prior, revenues slightly dropped by 7.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • 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.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Life Sciences Tools & Services industry average. The net income increased by 42.0% when compared to the same quarter one year prior, rising from -$1.11 million to -$0.65 million.

You can view the full analysis from the report here: VirtualScopics 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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