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 0.8% versus the S&P 500, which was down 0.7%. Laggards within the Telecommunications industry included Sajan ( SAJA), down 8.3%, Maxcom Telecomunicaciones SAB de CV ( MXT), down 6.5%, Voltari ( VLTC), down 4.4%, B Communications ( BCOM), down 1.9% and RIT Technologies ( RITT), down 6.7%.

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

B Communications ( BCOM) is one of the companies that pushed the Telecommunications industry lower today. B Communications was down $0.40 (1.9%) to $20.10 on heavy volume. Throughout the day, 39,372 shares of B Communications exchanged hands as compared to its average daily volume of 2,600 shares. The stock ranged in price between $19.40-$20.85 after having opened the day at $20.14 as compared to the previous trading day's close of $20.50.

B Communications Ltd. provides various communications services in Israel. B Communications has a market cap of $602.3 million and is part of the technology sector. Shares are up 15.1% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates B Communications as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and attractive valuation levels. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet.

Highlights from TheStreet Ratings analysis on BCOM go as follows:

  • BCOM's revenue growth has slightly outpaced the industry average of 1.4%. Since the same quarter one year prior, revenues slightly increased by 3.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 2751.61% and other important driving factors, this stock has surged by 53.44% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • 43.72% is the gross profit margin for B COMMUNICATIONS LTD which we consider to be strong. Regardless of BCOM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BCOM's net profit margin of 39.34% significantly outperformed against the industry.
  • The debt-to-equity ratio is very high at 14.29 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, BCOM maintains a poor quick ratio of 0.82, which illustrates the inability to avoid short-term cash problems.

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

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At the close, Maxcom Telecomunicaciones SAB de CV ( MXT) was down $0.10 (6.5%) to $1.43 on light volume. Throughout the day, 900 shares of Maxcom Telecomunicaciones SAB de CV exchanged hands as compared to its average daily volume of 6,800 shares. The stock ranged in price between $1.43-$1.47 after having opened the day at $1.47 as compared to the previous trading day's close of $1.53.

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 $225.5 million and is part of the technology sector. Shares are down 6.1% year-to-date as of the close of trading on Monday. 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.

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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.

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 43.55%, 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

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Sajan ( SAJA) was another company that pushed the Telecommunications industry lower today. Sajan was down $0.45 (8.3%) to $5.00 on heavy volume. Throughout the day, 19,754 shares of Sajan exchanged hands as compared to its average daily volume of 1,200 shares. The stock ranged in price between $5.00-$5.40 after having opened the day at $5.26 as compared to the previous trading day's close of $5.45.

Sajan has a market cap of $22.4 million and is part of the technology sector. Shares are down 5.2% year-to-date as of the close of trading on Monday.

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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