3 Stocks Pushing The Technology 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 Technology sector as a whole closed the day up 0.6% versus the S&P 500, which was up 0.9%. Laggards within the Technology sector included Trio-Tech International ( TRT), down 3.8%, One Horizon Group ( OHGI), down 5.2%, BluePhoenix Solutions ( BPHX), down 2.6%, Cover-All Technologies ( COVR), down 1.6% and Intelligent Systems ( INS), down 1.8%.

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

Telephone and Data Systems ( TDS) is one of the companies that pushed the Technology sector lower today. Telephone and Data Systems was down $1.18 (4.8%) to $23.32 on heavy volume. Throughout the day, 1,497,924 shares of Telephone and Data Systems exchanged hands as compared to its average daily volume of 587,700 shares. The stock ranged in price between $23.08-$24.57 after having opened the day at $24.50 as compared to the previous trading day's close of $24.50.

Telephone and Data Systems, Inc., a diversified telecommunications service company, provides wireless and wireline telecommunications services in the United States. The company operates in three segments: Wireline, Cable, and Hosted and Managed Services. Telephone and Data Systems has a market cap of $2.5 billion and is part of the telecommunications industry. Shares are down 5.0% year-to-date as of the close of trading on Friday. Currently there are 4 analysts who rate Telephone and Data Systems a buy, no analysts rate it a sell, and 1 rates it a hold.

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TheStreet Ratings rates Telephone and Data Systems as a hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow.

Highlights from TheStreet Ratings analysis on TDS go as follows:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Wireless Telecommunication Services industry. The net income increased by 1186.4% when compared to the same quarter one year prior, rising from $1.42 million to $18.25 million.
  • The current debt-to-equity ratio, 0.42, 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 1.50, which illustrates the ability to avoid short-term cash problems.
  • The gross profit margin for TELEPHONE & DATA SYSTEMS INC is rather high; currently it is at 51.29%. Regardless of TDS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TDS's net profit margin of 1.52% is significantly lower than the industry average.
  • Net operating cash flow has significantly decreased to $104.94 million or 57.40% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • TDS has underperformed the S&P 500 Index, declining 5.70% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.

You can view the full analysis from the report here: Telephone and Data Systems Ratings Report

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At the close, Cover-All Technologies ( COVR) was down $0.02 (1.6%) to $1.19 on light volume. Throughout the day, 968 shares of Cover-All Technologies exchanged hands as compared to its average daily volume of 20,400 shares. The stock ranged in price between $1.19-$1.22 after having opened the day at $1.19 as compared to the previous trading day's close of $1.21.

Cover-All Technologies Inc., through its subsidiary, Cover-All Systems, Inc., licenses and maintains software products for the property/casualty insurance industry in the United States and Puerto Rico. Cover-All Technologies has a market cap of $32.5 million and is part of the telecommunications industry. Shares are down 12.9% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Cover-All Technologies 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 disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on COVR 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 Software industry. The net income has significantly decreased by 38.4% when compared to the same quarter one year ago, falling from $0.71 million to $0.43 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 Software industry and the overall market, COVER-ALL TECHNOLOGIES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of COVER-ALL TECHNOLOGIES INC has not done very well: it is down 8.28% 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.
  • COVER-ALL TECHNOLOGIES INC's earnings per share declined by 33.3% 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, COVER-ALL TECHNOLOGIES INC continued to lose money by earning -$0.10 versus -$0.20 in the prior year.
  • The revenue fell significantly faster than the industry average of 11.1%. Since the same quarter one year prior, revenues fell by 24.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

You can view the full analysis from the report here: Cover-All Technologies 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.

BluePhoenix Solutions ( BPHX) was another company that pushed the Technology sector lower today. BluePhoenix Solutions was down $0.10 (2.6%) to $3.88 on heavy volume. Throughout the day, 22,412 shares of BluePhoenix Solutions exchanged hands as compared to its average daily volume of 5,300 shares. The stock ranged in price between $3.88-$4.15 after having opened the day at $3.91 as compared to the previous trading day's close of $3.99.

BluePhoenix Solutions Ltd. develops and markets enterprise legacy lifecycle information technology (IT) modernization solutions worldwide. BluePhoenix Solutions has a market cap of $47.4 million and is part of the telecommunications industry. Shares are down 10.2% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates BluePhoenix Solutions as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, weak operating cash flow and generally disappointing historical performance in the stock itself.

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Highlights from TheStreet Ratings analysis on BPHX 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 Software industry. The net income has significantly decreased by 53.8% when compared to the same quarter one year ago, falling from -$0.60 million to -$0.92 million.
  • Net operating cash flow has decreased to -$1.68 million or 49.11% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • In its most recent trading session, BPHX has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Software industry and the overall market, BLUEPHOENIX SOLUTIONS LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • 49.55% is the gross profit margin for BLUEPHOENIX SOLUTIONS LTD which we consider to be strong. Regardless of BPHX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BPHX's net profit margin of -49.33% significantly underperformed when compared to the industry average.

You can view the full analysis from the report here: BluePhoenix Solutions 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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