3 Stocks Pushing The Telecommunications Industry 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 Telecommunications industry as a whole closed the day down 0.2% versus the S&P 500, which was down 0.2%. Laggards within the Telecommunications industry included Maxcom Telecomunicaciones SAB de CV ( MXT), down 4.5%, Internet Gold Golden Lines ( IGLD), down 5.1%, Hong Kong Television Network ( HKTV), down 2.5%, America Movil SAB de CV ( AMOV), down 9.8% and Elephant Talk Communications ( ETAK), down 3.6%.

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

Elephant Talk Communications ( ETAK) is one of the companies that pushed the Telecommunications industry lower today. Elephant Talk Communications was down $0.04 (3.6%) to $0.95 on heavy volume. Throughout the day, 373,002 shares of Elephant Talk Communications exchanged hands as compared to its average daily volume of 203,100 shares. The stock ranged in price between $0.94-$0.99 after having opened the day at $0.99 as compared to the previous trading day's close of $0.99.

Elephant talk Communications Corporation operates as mobile software defined network architecture vendor in Europe, the Middle East, Africa, and the Americas. Elephant Talk Communications has a market cap of $136.9 million and is part of the technology sector. Shares are down 19.5% year-to-date as of the close of trading on Wednesday. Currently there is 1 analyst who rates Elephant Talk Communications a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Elephant Talk Communications as a sell. Among the areas we feel are negative, one of the most important has been weak operating cash flow.

Highlights from TheStreet Ratings analysis on ETAK go as follows:

  • Net operating cash flow has decreased to -$1.16 million or 47.77% 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.
  • 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 Diversified Telecommunication Services industry and the overall market, ELEPHANT TALK COMM INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The current debt-to-equity ratio, 0.56, 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 0.85 is somewhat weak and could be cause for future problems.
  • The gross profit margin for ELEPHANT TALK COMM INC is currently very high, coming in at 88.01%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -66.71% is in-line with the industry average.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, and has traded in line with the S&P 500. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.

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

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At the close, Internet Gold Golden Lines ( IGLD) was down $0.50 (5.1%) to $9.38 on light volume. Throughout the day, 100 shares of Internet Gold Golden Lines exchanged hands as compared to its average daily volume of 3,700 shares. The stock ranged in price between $9.38-$9.38 after having opened the day at $9.38 as compared to the previous trading day's close of $9.88.

Internet Gold Golden Lines has a market cap of $177.6 million and is part of the technology sector. Shares are up 15.4% year-to-date as of the close of trading on Wednesday.

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Maxcom Telecomunicaciones SAB de CV ( MXT) was another company that pushed the Telecommunications industry lower today. Maxcom Telecomunicaciones SAB de CV was down $0.07 (4.5%) to $1.50 on light volume. Throughout the day, 200 shares of Maxcom Telecomunicaciones SAB de CV exchanged hands as compared to its average daily volume of 7,000 shares. The stock ranged in price between $1.50-$1.52 after having opened the day at $1.52 as compared to the previous trading day's close of $1.57.

Maxcom Telecomunicaciones, S.A.B. de C.V., an integrated telecommunication services operator, provides voice and data services to residential and small and medium-sized business customers in Mexico. Maxcom Telecomunicaciones SAB de CV has a market cap of $234.4 million and is part of the technology sector. Shares are down 3.7% year-to-date as of the close of trading on Wednesday. Currently there are no analysts who rate Maxcom Telecomunicaciones SAB de CV a buy, no analysts rate it a sell, and 1 rates it a hold.

TheStreet Ratings rates Maxcom Telecomunicaciones SAB de CV 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 and generally disappointing historical performance in the stock itself.

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Highlights from TheStreet Ratings analysis on MXT go as follows:

  • MAXCOM TELECOMUNICACIONES SA 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, MAXCOM TELECOMUNICACIONES SA reported poor results of -$0.57 versus -$0.11 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 Diversified Telecommunication Services industry. The net income has significantly decreased by 134.3% when compared to the same quarter one year ago, falling from $4.19 million to -$1.44 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 Diversified Telecommunication Services industry and the overall market, MAXCOM TELECOMUNICACIONES SA's return on equity significantly trails 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 43.34%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 133.33% 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.
  • 49.71% is the gross profit margin for MAXCOM TELECOMUNICACIONES SA which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, MXT's net profit margin of -2.88% significantly underperformed when compared to the industry average.

You can view the full analysis from the report here: Maxcom Telecomunicaciones SAB de CV 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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