3 Stocks Pushing The Internet Industry Lower

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The Internet industry as a whole closed the day down 1.8% versus the S&P 500, which was down 0.1%. Laggards within the Internet industry included ChinaNet Online Holdings ( CNET), down 3.0%, LookSmart ( LOOK), down 5.1%, Internet Initiative Japan ( IIJI), down 3.1%, CafePress ( PRSS), down 1.9% and Geeknet ( GKNT), down 6.8%.

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

Internet Initiative Japan ( IIJI) is one of the companies that pushed the Internet industry lower today. Internet Initiative Japan was down $0.34 (3.1%) to $10.69 on heavy volume. Throughout the day, 6,934 shares of Internet Initiative Japan exchanged hands as compared to its average daily volume of 4,200 shares. The stock ranged in price between $10.11-$10.74 after having opened the day at $10.74 as compared to the previous trading day's close of $11.03.

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 $1.0 billion and is part of the technology sector. Shares are down 17.5% year-to-date as of the close of trading on Thursday. Currently there are no analysts who rate Internet Initiative Japan a buy, no analysts rate it a sell, and 1 rates it a hold.

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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 lackluster performance in the stock itself.

Highlights from TheStreet Ratings analysis on IIJI go as follows:

  • The revenue growth came in higher than the industry average of 11.5%. 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.
  • 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. When compared to other companies in the Internet Software & Services industry and the overall market, INTERNET INITIATIVE JAPAN INC's return on equity is below that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 32.74%, 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. Despite the heavy decline in its share price over the last year, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry. We feel, however, that other strengths this company displays compensate for this.

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

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