3 Stocks Pushing The Health Care 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 Health Care sector as a whole closed the day up 0.7% versus the S&P 500, which was down 0.3%. Laggards within the Health Care sector included XTL Biopharmaceuticals ( XTLB), down 1.8%, China Pharma ( CPHI), down 9.1%, Electromed ( ELMD), down 2.1%, American Shared Hospital Services ( AMS), down 2.8% and Misonix ( MSON), down 5.9%.

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

Electromed ( ELMD) is one of the companies that pushed the Health Care sector lower today. Electromed was down $0.03 (2.1%) to $1.40 on light volume. Throughout the day, 500 shares of Electromed exchanged hands as compared to its average daily volume of 24,500 shares. The stock ranged in price between $1.40-$1.40 after having opened the day at $1.40 as compared to the previous trading day's close of $1.43.

Electromed, Inc. develops, manufactures, markets, and sells airway clearance therapy products. Electromed has a market cap of $11.3 million and is part of the drugs industry. Shares are down 57.9% year-to-date as of the close of trading on Monday. Currently there is 1 analyst who rates Electromed a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Electromed 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 and disappointing return on equity.

Highlights from TheStreet Ratings analysis on ELMD go as follows:

  • ELECTROMED INC 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 two years. We anticipate that this should continue in the coming year. During the past fiscal year, ELECTROMED INC swung to a loss, reporting -$0.16 versus $0.02 in the prior year. For the next year, the market is expecting a contraction of 18.8% in earnings (-$0.19 versus -$0.16).
  • 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 Health Care Equipment & Supplies industry. The net income has significantly decreased by 132.9% when compared to the same quarter one year ago, falling from -$0.43 million to -$1.00 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, ELECTROMED INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ELECTROMED INC is rather high; currently it is at 68.31%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, ELMD's net profit margin of -25.37% significantly underperformed when compared to the industry average.
  • Compared to where it was a year ago, the stock is now trading at a higher level, and has traded in line with 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.

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

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At the close, China Pharma ( CPHI) was down $0.03 (9.1%) to $0.30 on light volume. Throughout the day, 30,224 shares of China Pharma exchanged hands as compared to its average daily volume of 98,800 shares. The stock ranged in price between $0.29-$0.32 after having opened the day at $0.32 as compared to the previous trading day's close of $0.33.

China Pharma Holdings, Inc. develops, manufactures, and markets generic and branded pharmaceutical, and biochemical products to hospitals and private retailers in the People's Republic of China. China Pharma has a market cap of $14.6 million and is part of the drugs industry. Shares are down 4.3% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates China Pharma as a sell. Among the areas we feel are negative, one of the most important has been an overall disappointing return on equity.

Highlights from TheStreet Ratings analysis on CPHI go as follows:

  • 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 Pharmaceuticals industry and the overall market, CHINA PHARMA HOLDINGS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • CHINA PHARMA HOLDINGS INC has improved earnings per share by 16.7% in the most recent quarter compared to the same quarter a year ago. 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, CHINA PHARMA HOLDINGS INC swung to a loss, reporting -$0.45 versus $0.10 in the prior year.
  • CPHI, with its decline in revenue, slightly underperformed the industry average of 6.3%. Since the same quarter one year prior, revenues fell by 14.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • 41.65% is the gross profit margin for CHINA PHARMA HOLDINGS INC which we consider to be strong. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -33.63% is in-line with the industry average.
  • Net operating cash flow has significantly increased by 124.81% to $2.49 million when compared to the same quarter last year. In addition, CHINA PHARMA HOLDINGS INC has also vastly surpassed the industry average cash flow growth rate of -54.80%.

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

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XTL Biopharmaceuticals ( XTLB) was another company that pushed the Health Care sector lower today. XTL Biopharmaceuticals was down $0.06 (1.8%) to $3.26 on light volume. Throughout the day, 416 shares of XTL Biopharmaceuticals exchanged hands as compared to its average daily volume of 5,700 shares. The stock ranged in price between $3.14-$3.37 after having opened the day at $3.14 as compared to the previous trading day's close of $3.32.

XTL Biopharmaceuticals Ltd., a biopharmaceutical company, is engaged in the acquisition and development of pharmaceutical products for the treatment of unmet medical needs. XTL Biopharmaceuticals has a market cap of $36.8 million and is part of the drugs industry. Shares are up 14.5% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate XTL Biopharmaceuticals a buy, 1 analyst rates it a sell, and none rate it a hold.

TheStreet Ratings rates XTL Biopharmaceuticals as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

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Highlights from TheStreet Ratings analysis on XTLB go as follows:

  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Biotechnology industry and the overall market, XTL BIOPHARMACEUTICALS's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to -$0.80 million or 44.12% when compared to the same quarter last year. Despite a decrease in cash flow XTL BIOPHARMACEUTICALS is still fairing well by exceeding its industry average cash flow growth rate of -71.74%.
  • XTLB's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 46.46%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Biotechnology industry average, but is greater than that of the S&P 500. The net income increased by 21.3% when compared to the same quarter one year prior, going from -$0.87 million to -$0.69 million.
  • The revenue fell significantly faster than the industry average of 36.6%. Since the same quarter one year prior, revenues fell by 12.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

You can view the full analysis from the report here: XTL Biopharmaceuticals 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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