3 Stocks Pushing The Services Sector 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 Services sector as a whole closed the day up 0.5% versus the S&P 500, which was up 0.8%. Laggards within the Services sector included General Employment ( JOB), down 3.0%, Bowl America ( BWL.A), down 5.0%, QKL Stores ( QKLS), down 3.6%, Point 360 ( PTSX), down 11.5% and China Metro-Rural Holdings ( CNR), down 1.8%.

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

AAR ( AIR) is one of the companies that pushed the Services sector lower today. AAR was down $3.29 (11.8%) to $24.71 on heavy volume. Throughout the day, 1,892,116 shares of AAR exchanged hands as compared to its average daily volume of 216,200 shares. The stock ranged in price between $24.38-$26.65 after having opened the day at $26.20 as compared to the previous trading day's close of $28.00.

AAR CORP. provides products and services to commercial aviation, government, and defense markets worldwide. The company operates through two segments, Aviation Services and Technology Products. AAR has a market cap of $1.1 billion and is part of the aerospace/defense industry. Shares are down 0.0% year-to-date as of the close of trading on Tuesday. Currently there is 1 analyst who rates AAR a buy, no analysts rate it a sell, and 1 rates it a hold.

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TheStreet Ratings rates AAR as a buy. 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, attractive valuation levels, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from TheStreet Ratings analysis on AIR go as follows:

  • AAR CORP reported significant earnings per share improvement 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. During the past fiscal year, AAR CORP increased its bottom line by earning $1.83 versus $1.36 in the prior year. This year, the market expects an improvement in earnings ($1.87 versus $1.83).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Aerospace & Defense industry. The net income increased by 2750.0% when compared to the same quarter one year prior, rising from $0.60 million to $17.10 million.
  • AIR, with its decline in revenue, underperformed when compared the industry average of 1.3%. Since the same quarter one year prior, revenues fell by 13.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • AIR's debt-to-equity ratio of 0.63 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.96 is weak.

You can view the full analysis from the report here: AAR 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, China Metro-Rural Holdings ( CNR) was down $0.02 (1.8%) to $0.88 on light volume. Throughout the day, 393 shares of China Metro-Rural Holdings exchanged hands as compared to its average daily volume of 22,900 shares. The stock ranged in price between $0.88-$0.88 after having opened the day at $0.88 as compared to the previous trading day's close of $0.90.

China Metro-Rural Holdings has a market cap of $65.5 million and is part of the aerospace/defense industry. Shares are down 1.1% year-to-date as of the close of trading on Tuesday. Currently there is 1 analyst who rates China Metro-Rural Holdings 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.

QKL Stores ( QKLS) was another company that pushed the Services sector lower today. QKL Stores was down $0.11 (3.6%) to $2.98 on average volume. Throughout the day, 3,709 shares of QKL Stores exchanged hands as compared to its average daily volume of 4,200 shares. The stock ranged in price between $2.98-$3.03 after having opened the day at $3.00 as compared to the previous trading day's close of $3.09.

QKL Stores Inc., together with its subsidiaries, operates a supermarket chain in northeastern China and Inner Mongolia. QKL Stores has a market cap of $4.8 million and is part of the aerospace/defense industry. Shares are down 26.4% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates QKL Stores as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally high debt management risk, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself.

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

Highlights from TheStreet Ratings analysis on QKLS 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 Food & Staples Retailing industry. The net income has significantly decreased by 158.8% when compared to the same quarter one year ago, falling from -$1.45 million to -$3.76 million.
  • The debt-to-equity ratio of 1.30 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, QKLS has a quick ratio of 0.56, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • The gross profit margin for QKL STORES INC is rather low; currently it is at 16.82%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -7.28% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to $2.17 million or 58.24% 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.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 34.82%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 157.29% 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.

You can view the full analysis from the report here: QKL Stores 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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