3 Stocks Pushing The Utilities 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 Utilities sector as a whole closed the day down 1.3% versus the S&P 500, which was down 0.9%. Laggards within the Utilities sector included RGC Resources ( RGCO), down 2.4%, American DG Energy ( ADGE), down 5.4%, U S Geothermal ( HTM), down 1.7%, Centrais Eletricas Brasileiras ( EBR.B), down 5.1% and Ocean Power Technologies ( OPTT), down 4.9%.

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

Ocean Power Technologies ( OPTT) is one of the companies that pushed the Utilities sector lower today. Ocean Power Technologies was down $0.06 (4.9%) to $1.17 on light volume. Throughout the day, 177,250 shares of Ocean Power Technologies exchanged hands as compared to its average daily volume of 533,100 shares. The stock ranged in price between $1.16-$1.24 after having opened the day at $1.23 as compared to the previous trading day's close of $1.23.

Ocean Power Technologies, Inc. engages in the development and commercialization of proprietary systems that generate electricity by harnessing the renewable energy of ocean waves primarily in the United States, Europe, Asia, and Australia. Ocean Power Technologies has a market cap of $23.0 million and is part of the utilities industry. Shares are down 35.9% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Ocean Power Technologies 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 OPTT go as follows:

  • The gross profit margin for OCEAN POWER TECHNOLOGIES INC is rather low; currently it is at 21.87%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -855.73% is significantly below that of the industry average.
  • OPTT has underperformed the S&P 500 Index, declining 12.11% 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.
  • 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 Electrical Equipment industry and the overall market, OCEAN POWER TECHNOLOGIES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • OCEAN POWER TECHNOLOGIES INC has improved earnings per share by 47.5% 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 two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, OCEAN POWER TECHNOLOGIES INC continued to lose money by earning -$0.94 versus -$1.42 in the prior year. For the next year, the market is expecting a contraction of 6.4% in earnings (-$1.00 versus -$0.94).
  • OPTT, with its decline in revenue, slightly underperformed the industry average of 7.8%. Since the same quarter one year prior, revenues slightly dropped by 8.1%. 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: Ocean Power Technologies Ratings Report

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At the close, Centrais Eletricas Brasileiras ( EBR.B) was down $0.26 (5.1%) to $4.80 on light volume. Throughout the day, 41,396 shares of Centrais Eletricas Brasileiras exchanged hands as compared to its average daily volume of 86,100 shares. The stock ranged in price between $4.80-$5.02 after having opened the day at $4.95 as compared to the previous trading day's close of $5.06.

Centrais Eletricas Brasileiras S.A. - Eletrobras, together with its subsidiaries, generates, transmits, and distributes electricity in Brazil. It projects, builds, and operates generating power plants, and electric power transmission and distribution lines. Centrais Eletricas Brasileiras has a market cap of $6.6 billion and is part of the utilities industry. Shares are up 15.0% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Centrais Eletricas Brasileiras as a sell. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and poor profit margins.

Highlights from TheStreet Ratings analysis on EBR.B go as follows:

  • Net operating cash flow has significantly decreased to $758.05 million or 58.45% 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 gross profit margin for ELETROBRAS-CENTR ELETR BRAS is currently lower than what is desirable, coming in at 27.17%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, EBR.B's net profit margin of 14.06% compares favorably to the industry average.
  • 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 Electric Utilities industry and the overall market, ELETROBRAS-CENTR ELETR BRAS's return on equity significantly trails that of both the industry average and the S&P 500.
  • The current debt-to-equity ratio, 0.58, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.96 is somewhat weak and could be cause for future problems.
  • This stock has increased by 27.58% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in EBR.B do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.

You can view the full analysis from the report here: Centrais Eletricas Brasileiras Ratings Report

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U S Geothermal ( HTM) was another company that pushed the Utilities sector lower today. U S Geothermal was down $0.01 (1.7%) to $0.64 on light volume. Throughout the day, 186,642 shares of U S Geothermal exchanged hands as compared to its average daily volume of 534,800 shares. The stock ranged in price between $0.62-$0.66 after having opened the day at $0.66 as compared to the previous trading day's close of $0.65.

U S Geothermal has a market cap of $66.4 million and is part of the utilities industry. Shares are up 68.9% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate U S Geothermal a buy, no analysts rate it a sell, and 1 rates it a hold.

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Highlights from TheStreet Ratings analysis on HTM go as follows:

You can view the full analysis from the report here: U S Geothermal 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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