3 Stocks Pushing The Computer Software & Services Industry Lower

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The Computer Software & Services industry as a whole closed the day down 0.2% versus the S&P 500, which was down 0.1%. Laggards within the Computer Software & Services industry included BluePhoenix Solutions ( BPHX), down 1.8%, TigerLogic ( TIGR), down 3.4%, Intelligent Systems ( INS), down 4.2%, GSE Systems ( GVP), down 3.5% and EFuture Information Technology ( EFUT), down 1.5%.

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

CDW ( CDW) is one of the companies that pushed the Computer Software & Services industry lower today. CDW was down $1.45 (4.4%) to $31.69 on heavy volume. Throughout the day, 2,944,122 shares of CDW exchanged hands as compared to its average daily volume of 653,300 shares. The stock ranged in price between $31.61-$32.20 after having opened the day at $32.17 as compared to the previous trading day's close of $33.14.

CDW Corporation provides information technology (IT) solutions in the United States and Canada. The company operates in two segments, Corporate and Public. CDW has a market cap of $5.7 billion and is part of the technology sector. Shares are up 41.9% year-to-date as of the close of trading on Tuesday. Currently there are 6 analysts who rate CDW a buy, no analysts rate it a sell, and 3 rate it a hold.

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TheStreet Ratings rates CDW as a sell. The company's weaknesses can be seen in multiple areas, such as its poor profit margins, weak operating cash flow and generally high debt management risk.

Highlights from TheStreet Ratings analysis on CDW go as follows:

  • The gross profit margin for CDW CORP is rather low; currently it is at 17.67%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.78% trails that of the industry average.
  • Net operating cash flow has significantly decreased to -$70.40 million or 7722.22% 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 debt-to-equity ratio is very high at 3.70 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, CDW's quick ratio is somewhat strong at 1.25, demonstrating the ability to handle short-term liquidity needs.
  • 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. In comparison to the other companies in the Electronic Equipment, Instruments & Components industry and the overall market, CDW CORP's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • This stock has increased by 49.90% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.

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

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At the close, GSE Systems ( GVP) was down $0.06 (3.5%) to $1.64 on average volume. Throughout the day, 20,580 shares of GSE Systems exchanged hands as compared to its average daily volume of 26,400 shares. The stock ranged in price between $1.58-$1.69 after having opened the day at $1.58 as compared to the previous trading day's close of $1.70.

GSE Systems, Inc. provides simulation, educational, and engineering solutions and services to the nuclear and fossil electric utility industry, and the chemical and petrochemical industries worldwide. GSE Systems has a market cap of $30.1 million and is part of the technology sector. Shares are up 6.2% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates GSE Systems 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 poor profit margins.

Highlights from TheStreet Ratings analysis on GVP go as follows:

  • GSE SYSTEMS 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, GSE SYSTEMS INC swung to a loss, reporting -$0.58 versus $0.06 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 Software industry. The net income has significantly decreased by 75.2% when compared to the same quarter one year ago, falling from -$1.16 million to -$2.02 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 Software industry and the overall market, GSE SYSTEMS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for GSE SYSTEMS INC is currently lower than what is desirable, coming in at 25.86%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -23.20% is significantly below that of the industry average.
  • The revenue fell significantly faster than the industry average of 11.5%. Since the same quarter one year prior, revenues fell by 29.5%. 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: GSE Systems Ratings Report

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BluePhoenix Solutions ( BPHX) was another company that pushed the Computer Software & Services industry lower today. BluePhoenix Solutions was down $0.07 (1.8%) to $3.81 on light volume. Throughout the day, 1,500 shares of BluePhoenix Solutions exchanged hands as compared to its average daily volume of 6,400 shares. The stock ranged in price between $3.65-$3.86 after having opened the day at $3.65 as compared to the previous trading day's close of $3.88.

BluePhoenix Solutions Ltd. develops and markets enterprise legacy lifecycle information technology (IT) modernization solutions worldwide. BluePhoenix Solutions has a market cap of $44.6 million and is part of the technology sector. Shares are down 15.7% year-to-date as of the close of trading on Tuesday.

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.
  • The share price of BLUEPHOENIX SOLUTIONS LTD has not done very well: it is down 19.78% 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.
  • 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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