3 Stocks Improving Performance Of The Diversified Services Industry

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.

Two out of the three major indices are trading lower today with the Dow Jones Industrial Average ( ^DJI) trading up 11 points (0.1%) at 17,078 as of Wednesday, Sept. 3, 2014, 4:20 PM ET. The NYSE advances/declines ratio sits at 1,398 issues advancing vs. 1,669 declining with 141 unchanged.

The Diversified Services industry as a whole closed the day down 0.6% versus the S&P 500, which was down 0.1%. Top gainers within the Diversified Services industry included Onvia ( ONVI), up 9.9%, VirtualScopics ( VSCP), up 10.9%, SmartPros ( SPRO), up 2.1%, AeroCentury ( ACY), up 1.6% and Luna Innovations ( LUNA), up 1.5%.

TheStreet Ratings Group would like to highlight 3 stocks pushing the industry higher today:

Luna Innovations ( LUNA) is one of the companies that pushed the Diversified Services industry higher today. Luna Innovations was up $0.02 (1.5%) to $1.31 on light volume. Throughout the day, 18,951 shares of Luna Innovations exchanged hands as compared to its average daily volume of 29,800 shares. The stock ranged in a price between $1.28-$1.33 after having opened the day at $1.28 as compared to the previous trading day's close of $1.29.

Luna Innovations Incorporated develops, manufactures, and markets fiber optic test and measurement, sensing, and instrumentation products to measure, monitor, protect, and enhance the processes in the telecommunications, aerospace, automotive, energy, and defense industries worldwide. Luna Innovations has a market cap of $19.7 million and is part of the services sector. Shares are down 7.8% year-to-date as of the close of trading on Tuesday. Currently there are no analysts who rate Luna Innovations a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Luna Innovations 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 LUNA go as follows:

  • Net operating cash flow has significantly decreased to -$1.68 million or 61.32% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Professional Services industry and the overall market, LUNA INNOVATIONS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • LUNA INNOVATIONS INC has improved earnings per share by 42.9% 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, LUNA INNOVATIONS INC reported poor results of -$0.31 versus -$0.19 in the prior year.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in 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.
  • 38.04% is the gross profit margin for LUNA INNOVATIONS INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -17.49% is in-line with the industry average.

You can view the full analysis from the report here: Luna Innovations 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.

At the close, AeroCentury ( ACY) was up $0.19 (1.6%) to $11.74 on average volume. Throughout the day, 3,276 shares of AeroCentury exchanged hands as compared to its average daily volume of 3,300 shares. The stock ranged in a price between $11.40-$11.90 after having opened the day at $11.90 as compared to the previous trading day's close of $11.55.

AeroCentury Corp. acquires and invests in used regional aircraft and aircraft engines for lease to regional carriers worldwide. As of February 28, 2014, the company owned 9 Bombardier Dash-8-300, 3 Bombardier CRJ-700, 7 Fokker 100, 3 Bombardier Dash-8-Q400, and 1 Bombardier CRJ-705 aircraft. AeroCentury has a market cap of $17.4 million and is part of the services sector. Shares are down 32.8% year-to-date as of the close of trading on Tuesday. Currently there is 1 analyst who rates AeroCentury a buy, no analysts rate it a sell, and none rate it a hold.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreet Ratings rates AeroCentury 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.

Highlights from TheStreet Ratings analysis on ACY go as follows:

  • AEROCENTURY CORP 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. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, AEROCENTURY CORP reported lower earnings of $2.13 versus $3.31 in the prior year. For the next year, the market is expecting a contraction of 216.9% in earnings (-$2.49 versus $2.13).
  • 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 Trading Companies & Distributors industry. The net income has significantly decreased by 393.5% when compared to the same quarter one year ago, falling from $1.34 million to -$3.92 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 Trading Companies & Distributors industry and the overall market, AEROCENTURY CORP'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 42.04%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 402.38% 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.
  • 46.18% is the gross profit margin for AEROCENTURY CORP which we consider to be strong. Regardless of ACY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ACY's net profit margin of -55.61% significantly underperformed when compared to the industry average.

You can view the full analysis from the report here: AeroCentury 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.

VirtualScopics ( VSCP) was another company that pushed the Diversified Services industry higher today. VirtualScopics was up $0.49 (10.9%) to $5.00 on heavy volume. Throughout the day, 19,391 shares of VirtualScopics exchanged hands as compared to its average daily volume of 5,800 shares. The stock ranged in a price between $4.41-$5.00 after having opened the day at $4.45 as compared to the previous trading day's close of $4.51.

VirtualScopics, Inc. provides imaging solutions for the pharmaceutical, biotechnology, and medical device industries. VirtualScopics has a market cap of $13.5 million and is part of the services sector. Shares are up 30.4% year-to-date as of the close of trading on Tuesday. Currently there is 1 analyst who rates VirtualScopics a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates VirtualScopics 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 VSCP go as follows:

  • The gross profit margin for VIRTUALSCOPICS INC is currently lower than what is desirable, coming in at 32.24%. Regardless of VSCP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, VSCP's net profit margin of -27.44% significantly underperformed when compared to the industry average.
  • VSCP has underperformed the S&P 500 Index, declining 15.44% 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.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Life Sciences Tools & Services industry and the overall market, VIRTUALSCOPICS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • VSCP, with its decline in revenue, underperformed when compared the industry average of 21.4%. Since the same quarter one year prior, revenues slightly dropped by 7.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Net operating cash flow has significantly increased by 66.23% to -$0.42 million when compared to the same quarter last year. Despite an increase in cash flow, VIRTUALSCOPICS INC's average is still marginally south of the industry average growth rate of 67.28%.

You can view the full analysis from the report here: VirtualScopics 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.

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.

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