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 0.8% versus the S&P 500, which was down 0.3%. Laggards within the Services sector included Gray Television ( GTN.A), down 5.0%, Crystal Rock Holdings ( CRVP), down 6.8%, QKL Stores ( QKLS), down 3.8%, Armco Metals Holdings ( AMCO), down 6.1% and Books-A-Million ( BAMM), down 2.3%.

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

Magna International ( MGA) is one of the companies that pushed the Services sector lower today. Magna International was down $3.95 (4.0%) to $94.91 on heavy volume. Throughout the day, 1,500,906 shares of Magna International exchanged hands as compared to its average daily volume of 457,600 shares. The stock ranged in price between $94.24-$98.25 after having opened the day at $98.25 as compared to the previous trading day's close of $98.86.

Magna International Inc. develops, manufactures, engineers, supplies, and sells automotive products. It operates through North America, Europe, Asia, and Rest of World segments. Magna International has a market cap of $21.6 billion and is part of the wholesale industry. Shares are up 20.5% year-to-date as of the close of trading on Monday. Currently there are 7 analysts who rate Magna International a buy, no analysts rate it a sell, and 5 rate it a hold.

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TheStreet Ratings rates Magna International as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, increase in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from TheStreet Ratings analysis on MGA go as follows:

  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • MAGNA INTERNATIONAL INC has improved earnings per share by 30.3% 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, MAGNA INTERNATIONAL INC increased its bottom line by earning $6.77 versus $6.09 in the prior year. This year, the market expects an improvement in earnings ($8.65 versus $6.77).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Auto Components industry average. The net income increased by 22.9% when compared to the same quarter one year prior, going from $415.00 million to $510.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.0%. Since the same quarter one year prior, revenues slightly increased by 5.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • MGA's debt-to-equity ratio is very low at 0.11 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.00, which illustrates the ability to avoid short-term cash problems.

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

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At the close, Books-A-Million ( BAMM) was down $0.04 (2.3%) to $1.67 on light volume. Throughout the day, 7,983 shares of Books-A-Million exchanged hands as compared to its average daily volume of 18,800 shares. The stock ranged in price between $1.67-$1.75 after having opened the day at $1.70 as compared to the previous trading day's close of $1.71.

Books-A-Million, Inc. operates as a book retailer primarily in the eastern United States. It operates in three segments: Retail Trade, Electronic Commerce Trade, and Real Estate Development and Management. Books-A-Million has a market cap of $25.4 million and is part of the wholesale industry. Shares are down 26.0% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Books-A-Million as a sell. The company's weaknesses can be seen in multiple areas, such as its poor profit margins, generally disappointing historical performance in the stock itself and generally high debt management risk.

Highlights from TheStreet Ratings analysis on BAMM go as follows:

  • The gross profit margin for BOOKS-A-MILLION INC is currently lower than what is desirable, coming in at 28.63%. Regardless of BAMM's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, BAMM's net profit margin of -2.78% significantly underperformed when compared to the industry average.
  • BAMM has underperformed the S&P 500 Index, declining 18.31% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • BAMM'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. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.06 is very low and demonstrates very weak liquidity.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Specialty Retail industry and the overall market, BOOKS-A-MILLION INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • BOOKS-A-MILLION INC reported significant earnings per share improvement in the most recent quarter compared to 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, BOOKS-A-MILLION INC swung to a loss, reporting -$0.52 versus $0.15 in the prior year.

You can view the full analysis from the report here: Books-A-Million 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.

QKL Stores ( QKLS) was another company that pushed the Services sector lower today. QKL Stores was down $0.11 (3.8%) to $2.78 on light volume. Throughout the day, 240 shares of QKL Stores exchanged hands as compared to its average daily volume of 4,400 shares. The stock ranged in price between $2.78-$2.78 after having opened the day at $2.78 as compared to the previous trading day's close of $2.89.

QKL Stores Inc., together with its subsidiaries, operates a supermarket chain in northeastern China and Inner Mongolia. QKL Stores has a market cap of $4.6 million and is part of the wholesale industry. Shares are down 31.2% year-to-date as of the close of trading on Monday.

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.

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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.

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