3 Stocks Pushing The Services Sector 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 Services sector as a whole closed the day down 0.3% versus the S&P 500, which was unchanged. Laggards within the Services sector included Spar Group ( SGRP), down 4.4%, Radio One ( ROIA), down 4.6%, Liberty Global ( LBTYB), down 4.7%, VirtualScopics ( VSCP), down 2.5% and Promotora de Informaciones SA/FI ( PRIS), down 2.6%.

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

VirtualScopics ( VSCP) is one of the companies that pushed the Services sector lower today. VirtualScopics was down $0.10 (2.5%) to $4.07 on light volume. Throughout the day, 2,908 shares of VirtualScopics exchanged hands as compared to its average daily volume of 6,600 shares. The stock ranged in price between $4.06-$4.14 after having opened the day at $4.06 as compared to the previous trading day's close of $4.17.

VirtualScopics, Inc. provides imaging solutions for the pharmaceutical, biotechnology, and medical device industries. VirtualScopics has a market cap of $12.5 million and is part of the diversified services industry. Shares are up 20.6% year-to-date as of the close of trading on Friday. Currently there is 1 analyst who rates VirtualScopics a buy, no analysts rate it a sell, and none rate it a hold.

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

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.
  • VSCP has underperformed the S&P 500 Index, declining 13.98% 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.
  • 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 21.6%. 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.
  • VIRTUALSCOPICS INC has improved earnings per share by 42.5% 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 year. During the past fiscal year, VIRTUALSCOPICS INC continued to lose money by earning -$1.02 versus -$1.10 in the prior year.

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

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At the close, Radio One ( ROIA) was down $0.22 (4.6%) to $4.53 on heavy volume. Throughout the day, 4,361 shares of Radio One exchanged hands as compared to its average daily volume of 2,600 shares. The stock ranged in price between $4.53-$4.64 after having opened the day at $4.57 as compared to the previous trading day's close of $4.75.

Radio One, Inc., together with its subsidiaries, operates as an urban-oriented multi-media company in the United States. The company operates through four segments: Radio Broadcasting, Reach Media, Internet, and Cable Television. Radio One has a market cap of $11.1 million and is part of the diversified services industry. Shares are up 25.0% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Radio One as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and generally higher debt management risk.

Highlights from TheStreet Ratings analysis on ROIA go as follows:

  • Compared to its closing price of one year ago, ROIA's share price has jumped by 121.96%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 12.5%. Since the same quarter one year prior, revenues rose by 12.1%. 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.
  • The gross profit margin for RADIO ONE INC is rather high; currently it is at 68.24%. Regardless of ROIA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ROIA's net profit margin of -22.67% significantly underperformed when compared to the industry average.
  • 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 Media industry and the overall market, RADIO ONE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Media industry. The net income has significantly decreased by 39.1% when compared to the same quarter one year ago, falling from -$18.11 million to -$25.18 million.

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

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Spar Group ( SGRP) was another company that pushed the Services sector lower today. Spar Group was down $0.06 (4.4%) to $1.30 on heavy volume. Throughout the day, 34,215 shares of Spar Group exchanged hands as compared to its average daily volume of 7,900 shares. The stock ranged in price between $1.27-$1.30 after having opened the day at $1.30 as compared to the previous trading day's close of $1.36.

SPAR Group Inc., together with its subsidiaries, provides merchandising and other marketing services worldwide. Spar Group has a market cap of $28.3 million and is part of the diversified services industry. Shares are down 31.3% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates Spar Group 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 reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and weak operating cash flow.

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Highlights from TheStreet Ratings analysis on SGRP go as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 12.5%. Since the same quarter one year prior, revenues rose by 12.2%. 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.
  • SGRP's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, SGRP has a quick ratio of 2.08, which demonstrates the ability of the company to cover short-term liquidity needs.
  • SPAR GROUP INC's earnings have gone downhill when comparing its most recently reported quarter with the same quarter a year earlier. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, SPAR GROUP INC increased its bottom line by earning $0.15 versus $0.13 in the prior year.
  • Net operating cash flow has significantly decreased to $2.47 million or 50.56% 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 Media industry. The net income has significantly decreased by 938.6% when compared to the same quarter one year ago, falling from $0.04 million to -$0.37 million.

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

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