3 Stocks Pushing The Services Sector Lower

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The Services sector as a whole closed the day down 0.6% versus the S&P 500, which was down 0.1%. Laggards within the Services sector included Discovery Communications ( DISCB), down 2.6%, QKL Stores ( QKLS), down 1.9%, Radio One ( ROIA), down 4.3%, Spar Group ( SGRP), down 3.6% and Sport Chalet ( SPCHA), down 2.8%.

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

Radio One ( ROIA) is one of the companies that pushed the Services sector lower today. Radio One was down $0.19 (4.3%) to $4.16 on average volume. Throughout the day, 2,386 shares of Radio One exchanged hands as compared to its average daily volume of 2,800 shares. The stock ranged in price between $4.16-$4.35 after having opened the day at $4.29 as compared to the previous trading day's close of $4.35.

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 $10.5 million and is part of the transportation industry. Shares are up 14.5% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Radio One as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity and generally high debt management risk.

Highlights from TheStreet Ratings analysis on ROIA go as follows:

  • 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.
  • 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 debt-to-equity ratio is very high at 15.39 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 2.68, which shows the ability to cover short-term cash needs.
  • 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.
  • RADIO ONE INC's earnings per share declined by 39.5% 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, RADIO ONE INC continued to lose money by earning -$1.30 versus -$1.33 in the prior year.

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

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At the close, QKL Stores ( QKLS) was down $0.06 (1.9%) to $3.14 on light volume. Throughout the day, 1,885 shares of QKL Stores exchanged hands as compared to its average daily volume of 2,800 shares. The stock ranged in price between $2.85-$3.46 after having opened the day at $3.46 as compared to the previous trading day's close of $3.20.

QKL Stores Inc., through its subsidiaries, engages in the operation of retail chain stores in the People's Republic of China. The company's supermarkets and hypermarkets sell a selection of merchandise, including groceries, fresh food, and non-food items. QKL Stores has a market cap of $4.1 million and is part of the transportation industry. Shares are down 23.8% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates QKL Stores as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, poor profit margins, weak operating cash flow, generally high debt management risk and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on QKLS go as follows:

  • 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 Food & Staples Retailing industry. The net income has significantly decreased by 858.3% when compared to the same quarter one year ago, falling from $0.40 million to -$3.06 million.
  • The gross profit margin for QKL STORES INC is rather low; currently it is at 17.12%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -3.55% trails that of the industry average.
  • Net operating cash flow has decreased to $18.00 million or 25.83% 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.
  • QKLS's debt-to-equity ratio of 0.88 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.47 is very low and demonstrates very weak liquidity.
  • The share price of QKL STORES INC has not done very well: it is down 16.43% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.

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

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Discovery Communications ( DISCB) was another company that pushed the Services sector lower today. Discovery Communications was down $2.25 (2.6%) to $83.16 on heavy volume. Throughout the day, 335 shares of Discovery Communications exchanged hands as compared to its average daily volume of 100 shares. The stock ranged in price between $83.16-$83.23 after having opened the day at $83.23 as compared to the previous trading day's close of $85.41.

Discovery Communications, Inc. operates as a media company worldwide. The company operates in three segments: U.S. Networks, International Networks, and Education. Discovery Communications has a market cap of $551.8 million and is part of the transportation industry. Shares are down 4.7% year-to-date as of the close of trading on Thursday. Currently there is 1 analyst who rates Discovery Communications a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates Discovery Communications as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, expanding profit margins, good cash flow from operations and growth in earnings per share. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

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Highlights from TheStreet Ratings analysis on DISCB go as follows:

  • DISCB's revenue growth has slightly outpaced the industry average of 12.5%. Since the same quarter one year prior, revenues rose by 22.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Media industry and the overall market, DISCOVERY COMMUNICATIONS INC's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for DISCOVERY COMMUNICATIONS INC is currently very high, coming in at 90.64%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 16.30% is above that of the industry average.
  • Net operating cash flow has significantly increased by 83.96% to $241.00 million when compared to the same quarter last year. In addition, DISCOVERY COMMUNICATIONS INC has also vastly surpassed the industry average cash flow growth rate of 2.76%.
  • DISCOVERY COMMUNICATIONS INC's earnings per share improvement from the most recent quarter was slightly positive. 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, DISCOVERY COMMUNICATIONS INC increased its bottom line by earning $2.97 versus $2.52 in the prior year. This year, the market expects an improvement in earnings ($11.00 versus $2.97).

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

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