3 Stocks Pushing The Telecommunications Industry Lower

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The Telecommunications industry as a whole closed the day up 0.3% versus the S&P 500, which was up 0.1%. Laggards within the Telecommunications industry included Sajan ( SAJA), down 3.5%, RRSat Global Communications Network ( RRST), down 1.6%, Ikanos Communications ( IKAN), down 4.7%, B Communications ( BCOM), down 7.9% and China TechFaith Wireless Comm Tech ( CNTF), down 2.9%.

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

Ikanos Communications ( IKAN) is one of the companies that pushed the Telecommunications industry lower today. Ikanos Communications was down $0.02 (4.7%) to $0.34 on average volume. Throughout the day, 149,894 shares of Ikanos Communications exchanged hands as compared to its average daily volume of 169,800 shares. The stock ranged in price between $0.32-$0.37 after having opened the day at $0.37 as compared to the previous trading day's close of $0.36.

Ikanos Communications, Inc. designs, develops, markets, and sells semiconductors and integrated firmware products for the digital home worldwide. It offers various digital subscriber line (DSL) processors for a range of power carrier infrastructure and customer premises equipment devices. Ikanos Communications has a market cap of $31.8 million and is part of the technology sector. Shares are down 69.8% year-to-date as of the close of trading on Tuesday. Currently there are 2 analysts who rate Ikanos Communications a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Ikanos Communications as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on IKAN 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 Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 42.2% when compared to the same quarter one year ago, falling from -$8.67 million to -$12.33 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 Semiconductors & Semiconductor Equipment industry and the overall market, IKANOS COMMUNICATIONS 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 -$10.57 million or 61.95% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • IKAN'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 74.40%, which is also worse than the performance of the S&P 500 Index. 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.
  • IKANOS COMMUNICATIONS INC reported flat earnings per share in the most recent quarter. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, IKANOS COMMUNICATIONS INC reported poor results of -$0.40 versus -$0.24 in the prior year. This year, the market expects an improvement in earnings (-$0.36 versus -$0.40).

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

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At the close, RRSat Global Communications Network ( RRST) was down $0.11 (1.6%) to $6.93 on average volume. Throughout the day, 10,581 shares of RRSat Global Communications Network exchanged hands as compared to its average daily volume of 7,900 shares. The stock ranged in price between $6.91-$7.01 after having opened the day at $7.01 as compared to the previous trading day's close of $7.04.

RRsat Global Communications Network Ltd. provides digital media management and distribution services for broadcasters and content owners in North America, Europe, Asia, Israel, the Middle East, and internationally. RRSat Global Communications Network has a market cap of $122.5 million and is part of the technology sector. Shares are down 16.2% year-to-date as of the close of trading on Tuesday. Currently there is 1 analyst who rates RRSat Global Communications Network a buy, no analysts rate it a sell, and 1 rates it a hold.

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TheStreet Ratings rates RRSat Global Communications Network as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from TheStreet Ratings analysis on RRST go as follows:

  • RRST's revenue growth has slightly outpaced the industry average of 8.0%. Since the same quarter one year prior, revenues rose by 10.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • RRST has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, RRST has a quick ratio of 1.68, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Media industry and the overall market, RRSAT GLOBAL COMM NTWRK LTD's return on equity is below that of both the industry average and the S&P 500.
  • The gross profit margin for RRSAT GLOBAL COMM NTWRK LTD is currently lower than what is desirable, coming in at 28.90%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.07% significantly trails the industry average.
  • Net operating cash flow has significantly decreased to $2.23 million or 73.37% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

You can view the full analysis from the report here: RRSat Global Communications Network Ratings Report

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Sajan ( SAJA) was another company that pushed the Telecommunications industry lower today. Sajan was down $0.20 (3.5%) to $5.49 on heavy volume. Throughout the day, 5,200 shares of Sajan exchanged hands as compared to its average daily volume of 2,100 shares. The stock ranged in price between $5.25-$5.50 after having opened the day at $5.50 as compared to the previous trading day's close of $5.69.

Sajan has a market cap of $21.6 million and is part of the technology sector. Shares are down 1.9% year-to-date as of the close of trading on Tuesday.

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