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 down 0.2% versus the S&P 500, which was down 0.3%. Laggards within the Services sector included Haverty Furniture Companies ( HVT.A), down 4.5%, Kelly Services ( KELYB), down 4.5%, Wilhelmina International ( WHLM), down 1.9%, Wilhelmina International ( WHLMD), down 1.9% and QKL Stores ( QKLS), down 4.0%.

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

CTC Media ( CTCM) is one of the companies that pushed the Services sector lower today. CTC Media was down $1.94 (22.6%) to $6.66 on heavy volume. Throughout the day, 4,628,374 shares of CTC Media exchanged hands as compared to its average daily volume of 627,500 shares. The stock ranged in price between $6.56-$8.60 after having opened the day at $8.60 as compared to the previous trading day's close of $8.60.

CTC Media, Inc., together with its subsidiaries, operates as an independent media company in Russia and other CIS markets. CTC Media has a market cap of $1.3 billion and is part of the media industry. Shares are down 38.1% year-to-date as of the close of trading on Friday. Currently there are no analysts who rate CTC Media a buy, 2 analysts rate it a sell, and 4 rate it a hold.

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TheStreet Ratings rates CTC Media as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from TheStreet Ratings analysis on CTCM go as follows:

  • CTCM 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. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.16, which illustrates the ability to avoid short-term cash problems.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to the other companies in the Media industry and the overall market, CTC MEDIA INC's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • 46.29% is the gross profit margin for CTC MEDIA INC which we consider to be strong. Regardless of CTCM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CTCM's net profit margin of 14.46% compares favorably to the industry average.
  • CTCM, with its decline in revenue, underperformed when compared the industry average of 8.1%. Since the same quarter one year prior, revenues fell by 10.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

You can view the full analysis from the report here: CTC Media 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, QKL Stores ( QKLS) was down $0.12 (4.0%) to $2.89 on light volume. Throughout the day, 900 shares of QKL Stores exchanged hands as compared to its average daily volume of 4,400 shares. The stock ranged in price between $2.89-$2.97 after having opened the day at $2.97 as compared to the previous trading day's close of $3.01.

QKL Stores Inc., together with its subsidiaries, operates a supermarket chain in northeastern China and Inner Mongolia. QKL Stores has a market cap of $4.3 million and is part of the media industry. Shares are down 28.3% year-to-date as of the close of trading on Friday.

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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 36.80%, 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.

Wilhelmina International ( WHLM) was another company that pushed the Services sector lower today. Wilhelmina International was down $0.12 (1.9%) to $6.05 on light volume. Throughout the day, 100 shares of Wilhelmina International exchanged hands as compared to its average daily volume of 2,000 shares. The stock ranged in price between $6.05-$6.05 after having opened the day at $6.05 as compared to the previous trading day's close of $6.17.

Wilhelmina International has a market cap of $36.2 million and is part of the media industry. Shares are up 2.8% year-to-date as of the close of trading on Friday.

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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