3 Stocks Pushing The Internet 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 Internet industry as a whole closed the day down 1.2% versus the S&P 500, which was down 1.6%. Laggards within the Internet industry included Professional Diversity Network ( IPDN), down 8.8%, Internet Initiative Japan ( IIJI), down 2.2%, BroadVision ( BVSN), down 1.6%, CafePress ( PRSS), down 1.8% and Local ( LOCM), down 1.6%.

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

CafePress ( PRSS) is one of the companies that pushed the Internet industry lower today. CafePress was down $0.06 (1.8%) to $3.29 on average volume. Throughout the day, 35,327 shares of CafePress exchanged hands as compared to its average daily volume of 40,400 shares. The stock ranged in price between $3.20-$3.39 after having opened the day at $3.27 as compared to the previous trading day's close of $3.35.

CafePress Inc. operates an e-commerce platform enabling customers to shop, create, and sell various customized and personalized products worldwide. CafePress has a market cap of $57.8 million and is part of the technology sector. Shares are down 47.1% year-to-date as of the close of trading on Wednesday. Currently there are no analysts who rate CafePress a buy, no analysts rate it a sell, and 4 rate it a hold.

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TheStreet Ratings rates CafePress 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, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from TheStreet Ratings analysis on PRSS 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 Internet & Catalog Retail industry. The net income has significantly decreased by 107.9% when compared to the same quarter one year ago, falling from -$1.72 million to -$3.57 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 Internet & Catalog Retail industry and the overall market, CAFEPRESS 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 -$0.60 million or 117.67% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much 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 44.78%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 110.00% 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.
  • CAFEPRESS INC 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. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, CAFEPRESS INC reported poor results of -$0.78 versus -$0.01 in the prior year. This year, the market expects an improvement in earnings (-$0.13 versus -$0.78).

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

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At the close, Internet Initiative Japan ( IIJI) was down $0.22 (2.2%) to $9.98 on average volume. Throughout the day, 3,088 shares of Internet Initiative Japan exchanged hands as compared to its average daily volume of 4,100 shares. The stock ranged in price between $9.97-$10.19 after having opened the day at $10.19 as compared to the previous trading day's close of $10.20.

Internet Initiative Japan Inc., together with its subsidiaries, offers Internet connectivity, WAN, outsourcing, and systems integration services primarily in Japan. The company operates in two segments: Network Services and Systems Integration Business, and ATM Operation Business. Internet Initiative Japan has a market cap of $950.1 million and is part of the technology sector. Shares are down 23.7% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Internet Initiative Japan as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income.

Highlights from TheStreet Ratings analysis on IIJI go as follows:

  • The revenue growth significantly trails the industry average of 43.9%. Since the same quarter one year prior, revenues slightly increased by 2.1%. 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.
  • Despite currently having a low debt-to-equity ratio of 0.31, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.20 is sturdy.
  • 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 Internet Software & Services industry. The net income has significantly decreased by 49.6% when compared to the same quarter one year ago, falling from $9.61 million to $4.85 million.
  • The gross profit margin for INTERNET INITIATIVE JAPAN INC is currently lower than what is desirable, coming in at 26.53%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.78% significantly trails the industry average.

You can view the full analysis from the report here: Internet Initiative Japan Ratings Report

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Professional Diversity Network ( IPDN) was another company that pushed the Internet industry lower today. Professional Diversity Network was down $0.49 (8.8%) to $5.10 on average volume. Throughout the day, 4,280 shares of Professional Diversity Network exchanged hands as compared to its average daily volume of 5,700 shares. The stock ranged in price between $4.60-$5.48 after having opened the day at $5.00 as compared to the previous trading day's close of $5.59.

Professional Diversity Network, Inc. operates online professional networking communities with career resources in the United States. Professional Diversity Network has a market cap of $35.0 million and is part of the technology sector. Shares are up 21.3% year-to-date as of the close of trading on Wednesday. Currently there is 1 analyst who rates Professional Diversity Network a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates Professional Diversity Network 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, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

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Highlights from TheStreet Ratings analysis on IPDN 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 Internet Software & Services industry. The net income has significantly decreased by 266.9% when compared to the same quarter one year ago, falling from -$0.13 million to -$0.49 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Internet Software & Services industry and the overall market, PROFESSIONAL DIVERSITY NETWK'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 -$0.77 million or 2161.76% 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 share price of PROFESSIONAL DIVERSITY NETWK has not done very well: it is down 7.37% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • PROFESSIONAL DIVERSITY NETWK 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 year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, PROFESSIONAL DIVERSITY NETWK swung to a loss, reporting -$0.23 versus $0.27 in the prior year. This year, the market expects an improvement in earnings (-$0.19 versus -$0.23).

You can view the full analysis from the report here: Professional Diversity Network 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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