3 Stocks Pushing The Telecommunications Industry Lower

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The Telecommunications industry as a whole closed the day down 1.5% versus the S&P 500, which was down 0.7%. Laggards within the Telecommunications industry included Optical Cable ( OCC), down 3.5%, Internet Gold Golden Lines ( IGLD), down 1.6%, Net Element ( NETE), down 8.0%, RIT Technologies ( RITT), down 4.1% and Voltari ( VLTC), down 4.0%.

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

TELUS ( TU) is one of the companies that pushed the Telecommunications industry lower today. TELUS was down $0.81 (2.2%) to $36.02 on heavy volume. Throughout the day, 330,748 shares of TELUS exchanged hands as compared to its average daily volume of 130,400 shares. The stock ranged in price between $35.66-$36.71 after having opened the day at $36.67 as compared to the previous trading day's close of $36.83.

TELUS Corporation provides a range of telecommunications services and products in Canada. The company operates through two segments, Wireless and Wireline. TELUS has a market cap of $23.1 billion and is part of the technology sector. Shares are up 6.9% year-to-date as of the close of trading on Monday. Currently there are 5 analysts who rate TELUS a buy, no analysts rate it a sell, and 2 rate it a hold.

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TheStreet Ratings rates TELUS as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and generally higher debt management risk.

Highlights from TheStreet Ratings analysis on TU go as follows:

  • TU's revenue growth has slightly outpaced the industry average of 3.3%. Since the same quarter one year prior, revenues slightly increased by 4.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
  • Even though the current debt-to-equity ratio is 1.01, it is still below the industry average, suggesting that this level of debt is acceptable within the Diversified Telecommunication Services industry. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.44 is very low and demonstrates very weak liquidity.
  • Net operating cash flow has decreased to $598.00 million or 17.96% 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.

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

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