3 Stocks Pushing The Telecommunications Industry Lower

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 Telecommunications industry as a whole closed the day down 0.8% versus the S&P 500, which was down 0.4%. Laggards within the Telecommunications industry included Optical Cable ( OCC), down 1.7%, Technical Communications ( TCCO), down 2.7%, Net Element ( NETE), down 22.4%, Internet Initiative Japan ( IIJI), down 2.5% and Iteris ( ITI), down 2.4%.

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

Nippon Telegraph & Telephone ( NTT) is one of the companies that pushed the Telecommunications industry lower today. Nippon Telegraph & Telephone was down $0.57 (1.8%) to $31.61 on heavy volume. Throughout the day, 544,187 shares of Nippon Telegraph & Telephone exchanged hands as compared to its average daily volume of 283,200 shares. The stock ranged in price between $31.43-$31.69 after having opened the day at $31.56 as compared to the previous trading day's close of $32.18.

Nippon Telegraph and Telephone Corporation, together with its subsidiaries, provides fixed and mobile voice related services, IP/packet communications services, telecommunications equipment, and system integration and other telecommunications-related services in Japan. Nippon Telegraph & Telephone has a market cap of $70.7 billion and is part of the technology sector. Shares are up 19.0% year-to-date as of the close of trading on Wednesday. Currently there is 1 analyst who rates Nippon Telegraph & Telephone a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Nippon Telegraph & Telephone as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, growth in earnings per share and increase in net income. 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 NTT go as follows:

  • The revenue growth greatly exceeded the industry average of 3.3%. Since the same quarter one year prior, revenues rose by 34.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.50, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.04, which illustrates the ability to avoid short-term cash problems.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • NIPPON TELEGRAPH & TELEPHONE 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, NIPPON TELEGRAPH & TELEPHONE increased its bottom line by earning $2.47 versus $2.29 in the prior year. This year, the market expects an improvement in earnings ($2.60 versus $2.47).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Telecommunication Services industry. The net income increased by 179.8% when compared to the same quarter one year prior, rising from $387.37 million to $1,083.85 million.

You can view the full analysis from the report here: Nippon Telegraph & Telephone Ratings Report

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At the close, Iteris ( ITI) was down $0.04 (2.4%) to $1.62 on average volume. Throughout the day, 64,464 shares of Iteris exchanged hands as compared to its average daily volume of 52,100 shares. The stock ranged in price between $1.61-$1.67 after having opened the day at $1.64 as compared to the previous trading day's close of $1.66.

Iteris, Inc. provides intelligent transportation systems solutions to the traffic management market worldwide. Iteris has a market cap of $55.7 million and is part of the technology sector. Shares are down 20.9% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Iteris as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and relatively poor performance when compared with the S&P 500 during the past year.

Highlights from TheStreet Ratings analysis on ITI go as follows:

  • ITI's revenue growth has slightly outpaced the industry average of 9.5%. Since the same quarter one year prior, revenues rose by 18.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • ITI 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. Along with this, the company maintains a quick ratio of 2.72, which clearly demonstrates the ability to cover short-term cash needs.
  • ITERIS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. However, the consensus estimates suggest that there will be an upward trend in the coming year. During the past fiscal year, ITERIS INC's EPS of $0.03 remained unchanged from the prior years' EPS of $0.03. This year, the market expects an improvement in earnings ($0.06 versus $0.03).
  • Net operating cash flow has decreased to -$0.84 million or 23.88% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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 Electronic Equipment, Instruments & Components industry. The net income has significantly decreased by 78.3% when compared to the same quarter one year ago, falling from $1.10 million to $0.24 million.

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

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Internet Initiative Japan ( IIJI) was another company that pushed the Telecommunications industry lower today. Internet Initiative Japan was down $0.30 (2.5%) to $11.85 on average volume. Throughout the day, 7,042 shares of Internet Initiative Japan exchanged hands as compared to its average daily volume of 4,700 shares. The stock ranged in price between $11.83-$11.90 after having opened the day at $11.86 as compared to the previous trading day's close of $12.15.

Internet Initiative Japan Inc., together with its subsidiaries, offers Internet connectivity, WAN, outsourcing, and systems integration services primarily in Japan. The company operates in two segments: Network Services and Systems Integration Business, and ATM Operation Business. Internet Initiative Japan has a market cap of $1.2 billion and is part of the technology sector. Shares are down 9.1% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates Internet Initiative Japan as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

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Highlights from TheStreet Ratings analysis on IIJI go as follows:

  • The revenue growth came in higher than the industry average of 21.2%. Since the same quarter one year prior, revenues rose by 33.0%. 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.
  • Despite currently having a low debt-to-equity ratio of 0.31, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.28 is sturdy.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 32.91%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 32.00% compared to the year-earlier quarter. Looking ahead, the stock's sharp decline over the past year may have been what was needed in order to bring its value into alignment with its fundamentals and others in its industry.
  • INTERNET INITIATIVE JAPAN INC's earnings per share declined by 32.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, INTERNET INITIATIVE JAPAN INC reported lower earnings of $0.49 versus $0.69 in the prior year.

You can view the full analysis from the report here: Internet Initiative Japan 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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