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

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