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 0.2%. Laggards within the Services sector included Liberty Media Corp Class B ( LVNTB), down 46.7%, General Employment ( JOB), down 5.9%, Gray Television ( GTN.A), down 1.6%, QKL Stores ( QKLS), down 7.4% and RLJ Entertainment ( RLJE), down 4.7%.

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

Genesco ( GCO) is one of the companies that pushed the Services sector lower today. Genesco was down $6.73 (7.6%) to $81.94 on heavy volume. Throughout the day, 660,244 shares of Genesco exchanged hands as compared to its average daily volume of 141,600 shares. The stock ranged in price between $79.67-$83.77 after having opened the day at $80.50 as compared to the previous trading day's close of $88.67.

Genesco Inc. is engaged in the retail and wholesale of footwear, apparel, and accessories. The company operates in five segments: Journeys Group, Schuh Group, Lids Sports Group, Johnston & Murphy Group, and Licensed Brands. Genesco has a market cap of $2.1 billion and is part of the retail industry. Shares are up 21.4% year-to-date as of the close of trading on Wednesday. Currently there are 4 analysts who rate Genesco a buy, no analysts rate it a sell, and 3 rate it a hold.

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TheStreet Ratings rates Genesco as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from TheStreet Ratings analysis on GCO go as follows:

  • GCO's revenue growth has slightly outpaced the industry average of 0.6%. Since the same quarter one year prior, revenues slightly increased by 6.3%. 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.
  • Net operating cash flow has increased to $32.17 million or 36.71% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 25.53%.
  • GCO's debt-to-equity ratio is very low at 0.04 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.39 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.

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

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At the close, RLJ Entertainment ( RLJE) was down $0.16 (4.7%) to $3.24 on heavy volume. Throughout the day, 11,179 shares of RLJ Entertainment exchanged hands as compared to its average daily volume of 5,700 shares. The stock ranged in price between $3.24-$3.38 after having opened the day at $3.38 as compared to the previous trading day's close of $3.40.

RLJ Entertainment, Inc., an entertainment company, acquires content rights in British episodic mystery and drama, urban programming, and full-length motion pictures. It operates through three segments: Intellectual Property Licensing, Wholesale, and Direct-to-Consumer. RLJ Entertainment has a market cap of $45.1 million and is part of the retail industry. Shares are down 29.0% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates RLJ Entertainment 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, disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on RLJE go as follows:

  • RLJ ENTERTAINMENT 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. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, RLJ ENTERTAINMENT INC reported poor results of -$2.30 versus -$0.49 in the prior year.
  • 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 Media industry. The net income has significantly decreased by 183.1% when compared to the same quarter one year ago, falling from -$3.56 million to -$10.07 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, RLJ ENTERTAINMENT INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for RLJ ENTERTAINMENT INC is rather low; currently it is at 20.04%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -33.26% is significantly below that of the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 40.76%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 200.00% compared to the year-earlier 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.

You can view the full analysis from the report here: RLJ Entertainment 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.

QKL Stores ( QKLS) was another company that pushed the Services sector lower today. QKL Stores was down $0.25 (7.4%) to $3.12 on heavy volume. Throughout the day, 8,463 shares of QKL Stores exchanged hands as compared to its average daily volume of 3,400 shares. The stock ranged in price between $2.91-$3.25 after having opened the day at $3.25 as compared to the previous trading day's close of $3.37.

QKL Stores Inc., together with its subsidiaries, operates a supermarket chain in northeastern China and Inner Mongolia. QKL Stores has a market cap of $5.1 million and is part of the retail industry. Shares are down 19.8% year-to-date as of the close of trading on Wednesday.

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.

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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.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 28.34%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 844.44% compared to the year-earlier 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.

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