3 Stocks Pushing The Media 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 Media industry as a whole was unchanged today versus the S&P 500, which was down 0.3%. Laggards within the Media industry included Gray Television ( GTN.A), down 2.5%, RLJ Entertainment ( RLJE), down 13.5%, NTN Buzztime ( NTN), down 2.0%, Liberty Media Corporation ( LMCB), down 2.4% and Discovery Communications ( DISCB), down 3.9%.

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

Discovery Communications ( DISCB) is one of the companies that pushed the Media industry lower today. Discovery Communications was down $1.74 (3.9%) to $42.39 on average volume. Throughout the day, 1,078 shares of Discovery Communications exchanged hands as compared to its average daily volume of 900 shares. The stock ranged in price between $42.39-$43.45 after having opened the day at $43.45 as compared to the previous trading day's close of $44.13.

Discovery Communications, Inc. operates as a media company worldwide. The company operates in three segments: U.S. Networks, International Networks, and Education. Discovery Communications has a market cap of $288.4 million and is part of the services sector. Shares are down 50.8% year-to-date as of the close of trading on Friday. Currently there is 1 analyst who rates Discovery Communications a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Discovery Communications as a hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow.

Highlights from TheStreet Ratings analysis on DISCB go as follows:

  • DISCOVERY COMMUNICATIONS INC has improved earnings per share by 32.9% 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, DISCOVERY COMMUNICATIONS INC increased its bottom line by earning $2.97 versus $2.52 in the prior year. This year, the market expects an improvement in earnings ($5.48 versus $2.97).
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Media industry average. The net income increased by 26.3% when compared to the same quarter one year prior, rising from $300.00 million to $379.00 million.
  • The gross profit margin for DISCOVERY COMMUNICATIONS INC is currently very high, coming in at 90.06%. Regardless of DISCB's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, DISCB's net profit margin of 23.54% significantly outperformed against the industry.
  • Net operating cash flow has decreased to $232.00 million or 31.56% 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.
  • DISCB's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 43.16%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, DISCB is still more expensive than most of the other companies in its industry.

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

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At the close, NTN Buzztime ( NTN) was down $0.01 (2.0%) to $0.45 on light volume. Throughout the day, 43,308 shares of NTN Buzztime exchanged hands as compared to its average daily volume of 65,600 shares. The stock ranged in price between $0.44-$0.47 after having opened the day at $0.46 as compared to the previous trading day's close of $0.46.

NTN Buzztime, Inc. provides an entertainment and marketing services platform for hospitality venues that offer games, events, and entertainment experiences in the United States and Canada. NTN Buzztime has a market cap of $41.6 million and is part of the services sector. Shares are down 27.1% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates NTN Buzztime as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from TheStreet Ratings analysis on NTN 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 Media industry. The net income has significantly decreased by 1261.6% when compared to the same quarter one year ago, falling from -$0.10 million to -$1.35 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, NTN BUZZTIME INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$1.79 million or 1092.22% 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 gross profit margin for NTN BUZZTIME INC is rather high; currently it is at 67.02%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, NTN's net profit margin of -19.61% significantly underperformed when compared to the industry average.
  • NTN BUZZTIME INC's earnings have gone downhill when comparing its most recently reported quarter with the same quarter a year earlier. Stable Earnings per share over the past year indicate the company has sound management over its earnings and share float. During the past fiscal year, NTN BUZZTIME INC continued to lose money by earning -$0.01 versus -$0.02 in the prior year.

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

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RLJ Entertainment ( RLJE) was another company that pushed the Media industry lower today. RLJ Entertainment was down $0.36 (13.5%) to $2.31 on average volume. Throughout the day, 9,380 shares of RLJ Entertainment exchanged hands as compared to its average daily volume of 6,700 shares. The stock ranged in price between $2.16-$2.67 after having opened the day at $2.67 as compared to the previous trading day's close of $2.67.

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 $35.4 million and is part of the services sector. Shares are down 44.3% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates RLJ Entertainment as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, weak operating cash flow, poor profit margins and generally disappointing historical performance in the stock itself.

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Highlights from TheStreet Ratings analysis on RLJE go as follows:

  • 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.
  • Net operating cash flow has significantly decreased to $0.17 million or 97.99% 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 RLJ ENTERTAINMENT INC is currently lower than what is desirable, coming in at 30.90%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, RLJE's net profit margin of -7.10% significantly underperformed when compared to the industry average.
  • RLJE's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 52.50%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
  • RLJ ENTERTAINMENT INC reported significant earnings per share improvement 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, RLJ ENTERTAINMENT INC reported poor results of -$2.30 versus -$0.49 in the prior year.

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.

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