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 0.3% versus the S&P 500, which was down 0.3%. Laggards within the Internet industry included LookSmart ( LOOK), down 10.2%, Taomee Holdings ( TAOM), down 2.0%, CafePress ( PRSS), down 5.2%, Geeknet ( GKNT), down 5.1% and Global Sources ( GSOL), down 1.8%.

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 $0.17 (5.2%) to $3.13 on average volume. Throughout the day, 35,279 shares of CafePress exchanged hands as compared to its average daily volume of 39,700 shares. The stock ranged in price between $3.13-$3.28 after having opened the day at $3.26 as compared to the previous trading day's close of $3.30.

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 $56.9 million and is part of the technology sector. Shares are down 47.9% year-to-date as of the close of trading on Monday. 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 45.26%, 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, Taomee Holdings ( TAOM) was down $0.09 (2.0%) to $4.36 on light volume. Throughout the day, 6,980 shares of Taomee Holdings exchanged hands as compared to its average daily volume of 20,700 shares. The stock ranged in price between $4.31-$4.45 after having opened the day at $4.45 as compared to the previous trading day's close of $4.45.

Taomee Holdings Limited operates as a children's entertainment and media company in the People's Republic of China. It operates through two segments, Online Business and Offline Business. Taomee Holdings has a market cap of $160.7 million and is part of the technology sector. Shares are down 11.9% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate Taomee Holdings a buy, no analysts rate it a sell, and 1 rates it a hold.

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TheStreet Ratings rates Taomee Holdings as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. 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 TAOM go as follows:

  • TAOM 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 this, the company maintains a quick ratio of 3.53, which clearly demonstrates the ability to cover short-term cash needs.
  • TAOM, with its decline in revenue, underperformed when compared the industry average of 11.5%. Since the same quarter one year prior, revenues fell by 14.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • TAOMEE HOLDINGS LTD -ADR 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, TAOMEE HOLDINGS LTD -ADR reported lower earnings of $0.15 versus $0.23 in the prior year. For the next year, the market is expecting a contraction of 146.7% in earnings (-$0.07 versus $0.15).
  • 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 Software industry. The net income has significantly decreased by 338.4% when compared to the same quarter one year ago, falling from $0.34 million to -$0.82 million.

You can view the full analysis from the report here: Taomee Holdings 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.

LookSmart ( LOOK) was another company that pushed the Internet industry lower today. LookSmart was down $0.25 (10.2%) to $2.20 on heavy volume. Throughout the day, 151,540 shares of LookSmart exchanged hands as compared to its average daily volume of 15,000 shares. The stock ranged in price between $2.05-$2.48 after having opened the day at $2.25 as compared to the previous trading day's close of $2.45.

LookSmart, Ltd. provides search and display advertising network solutions in the United States, Europe, the Middle East, and Africa. LookSmart has a market cap of $9.4 million and is part of the technology sector. Shares are down 20.5% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates LookSmart as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, disappointing return on equity, 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 LOOK 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 83.7% when compared to the same quarter one year ago, falling from -$1.01 million to -$1.86 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 Software & Services industry and the overall market, LOOKSMART LTD'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 -$1.06 million or 69.77% 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 32.52%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 77.77% 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.
  • LOOKSMART LTD 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. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, LOOKSMART LTD continued to lose money by earning -$0.93 versus -$1.92 in the prior year.

You can view the full analysis from the report here: LookSmart 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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