3 Stocks Pushing The Services Sector Lower

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The Services sector as a whole closed the day down 1.3% versus the S&P 500, which was down 1.6%. Laggards within the Services sector included Bowl America ( BWL.A), down 3.6%, Taitron Components ( TAIT), down 4.8%, Radio One ( ROIA), down 5.1%, QKL Stores ( QKLS), down 6.0% and Point 360 ( PTSX), down 4.4%.

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

Canadian National Railway ( CNI) is one of the companies that pushed the Services sector lower today. Canadian National Railway was down $1.30 (1.8%) to $70.53 on heavy volume. Throughout the day, 1,409,367 shares of Canadian National Railway exchanged hands as compared to its average daily volume of 849,400 shares. The stock ranged in price between $70.51-$71.64 after having opened the day at $71.44 as compared to the previous trading day's close of $71.83.

Canadian National Railway Company, together with its subsidiaries, engages in rail and related transportation business in North America. Canadian National Railway has a market cap of $59.0 billion and is part of the transportation industry. Shares are up 26.0% year-to-date as of the close of trading on Wednesday. Currently there are 6 analysts who rate Canadian National Railway a buy, no analysts rate it a sell, and 8 rate it a hold.

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TheStreet Ratings rates Canadian National Railway as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, increase in net income and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from TheStreet Ratings analysis on CNI go as follows:

  • CNI's revenue growth has slightly outpaced the industry average of 8.9%. Since the same quarter one year prior, revenues rose by 16.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 47.07% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CNI should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • CANADIAN NATIONAL RAILWAY CO has improved earnings per share by 21.9% 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, CANADIAN NATIONAL RAILWAY CO increased its bottom line by earning $3.09 versus $3.06 in the prior year. This year, the market expects an improvement in earnings ($3.65 versus $3.09).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Road & Rail industry average. The net income increased by 18.1% when compared to the same quarter one year prior, going from $717.00 million to $847.00 million.
  • 48.62% is the gross profit margin for CANADIAN NATIONAL RAILWAY CO which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 27.18% is above that of the industry average.

You can view the full analysis from the report here: Canadian National Railway Ratings Report

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At the close, QKL Stores ( QKLS) was down $0.18 (6.0%) to $2.80 on heavy volume. Throughout the day, 9,602 shares of QKL Stores exchanged hands as compared to its average daily volume of 4,300 shares. The stock ranged in price between $2.77-$2.99 after having opened the day at $2.99 as compared to the previous trading day's close of $2.98.

QKL Stores Inc., together with its subsidiaries, operates a supermarket chain in northeastern China and Inner Mongolia. QKL Stores has a market cap of $4.7 million and is part of the transportation industry. Shares are down 29.1% year-to-date as of the close of trading on Wednesday.

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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.

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

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Radio One ( ROIA) was another company that pushed the Services sector lower today. Radio One was down $0.16 (5.1%) to $2.95 on light volume. Throughout the day, 1,545 shares of Radio One exchanged hands as compared to its average daily volume of 2,300 shares. The stock ranged in price between $2.95-$2.96 after having opened the day at $2.96 as compared to the previous trading day's close of $3.11.

Radio One, Inc., together with its subsidiaries, operates as an urban-oriented multi-media company in the United States. The company operates through four segments: Radio Broadcasting, Reach Media, Internet, and Cable Television. Radio One has a market cap of $7.1 million and is part of the transportation industry. Shares are down 18.2% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates Radio One as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and generally high debt management risk.

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Highlights from TheStreet Ratings analysis on ROIA go as follows:

  • 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 Media industry and the overall market, RADIO ONE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The debt-to-equity ratio is very high at 19.00 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 2.63, which shows the ability to cover short-term cash needs.
  • The gross profit margin for RADIO ONE INC is rather high; currently it is at 68.71%. Regardless of ROIA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ROIA's net profit margin of -9.97% significantly underperformed when compared to the industry average.
  • ROIA, with its decline in revenue, underperformed when compared the industry average of 8.0%. Since the same quarter one year prior, revenues slightly dropped by 9.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • RADIO ONE INC has improved earnings per share by 20.7% 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 year. During the past fiscal year, RADIO ONE INC continued to lose money by earning -$1.30 versus -$1.33 in the prior year.

You can view the full analysis from the report here: Radio One 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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