3 Stocks Moving The Computer Software & Services Industry Upward

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.

Two out of the three major indices traded up today One out of the three major indices traded up today The three major indices are trading lower today with the Dow Jones Industrial Average ( ^DJI) trading down 5.88 points (0.0%) at 16,315 as of Tuesday, Oct. 14, 2014, 4:20 PM ET. The NYSE advances/declines ratio sits at 1,884 issues advancing vs. 1,209 declining with 128 unchanged.

The Computer Software & Services industry as a whole closed the day up 0.5% versus the S&P 500, which was up 0.2%. Top gainers within the Computer Software & Services industry included BluePhoenix Solutions ( BPHX), up 7.1%, Bridgeline Digital ( BLIN), up 6.7%, Sonic Foundry ( SOFO), up 4.2%, PAR Technology ( PAR), up 3.7% and Bsquare ( BSQR), up 2.6%.

TheStreet Ratings Group would like to highlight 3 stocks pushing the industry higher today:

Sonic Foundry ( SOFO) is one of the companies that pushed the Computer Software & Services industry higher today. Sonic Foundry was up $0.37 (4.2%) to $9.24 on light volume. Throughout the day, 1,211 shares of Sonic Foundry exchanged hands as compared to its average daily volume of 6,300 shares. The stock ranged in a price between $8.75-$9.24 after having opened the day at $8.75 as compared to the previous trading day's close of $8.87.

Sonic Foundry, Inc. provides enterprise solutions and services for the Web communications market in the United States, Europe, the Middle East, Asia, and internationally. Sonic Foundry has a market cap of $39.8 million and is part of the technology sector. Shares are down 8.7% year-to-date as of the close of trading on Monday. Currently there is 1 analyst who rates Sonic Foundry a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Sonic Foundry as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, 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 deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from TheStreet Ratings analysis on SOFO go as follows:

  • The revenue growth came in higher than the industry average of 11.6%. Since the same quarter one year prior, revenues rose by 40.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • Despite currently having a low debt-to-equity ratio of 0.42, 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 0.88 is weak.
  • 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 Software industry and the overall market, SONIC FOUNDRY 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 -$0.10 million or 166.66% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

You can view the full analysis from the report here: Sonic Foundry 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, Bridgeline Digital ( BLIN) was up $0.04 (6.7%) to $0.64 on light volume. Throughout the day, 1,554 shares of Bridgeline Digital exchanged hands as compared to its average daily volume of 31,100 shares. The stock ranged in a price between $0.62-$0.64 after having opened the day at $0.64 as compared to the previous trading day's close of $0.60.

Bridgeline Digital, Inc. develops iAPPS Web engagement management product platform and related digital solutions in the United States. Its iAPPS platform enables companies and developers to create Websites, Web applications, and online stores. Bridgeline Digital has a market cap of $14.0 million and is part of the technology sector. Shares are down 39.6% year-to-date as of the close of trading on Monday. Currently there is 1 analyst who rates Bridgeline Digital a buy, no analysts rate it a sell, and none rate it a hold.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreet Ratings rates Bridgeline Digital as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from TheStreet Ratings analysis on BLIN 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 Internet Software & Services industry and the overall market, BRIDGELINE DIGITAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • BLIN's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 35.58%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
  • BRIDGELINE DIGITAL INC has improved earnings per share by 40.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, BRIDGELINE DIGITAL INC reported poor results of -$0.23 versus -$0.07 in the prior year. For the next year, the market is expecting a contraction of 26.1% in earnings (-$0.29 versus -$0.23).
  • 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 0.95 is weak.
  • Net operating cash flow has increased to -$1.22 million or 14.87% when compared to the same quarter last year. Despite an increase in cash flow, BRIDGELINE DIGITAL INC's cash flow growth rate is still lower than the industry average growth rate of 25.64%.

You can view the full analysis from the report here: Bridgeline Digital 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.

BluePhoenix Solutions ( BPHX) was another company that pushed the Computer Software & Services industry higher today. BluePhoenix Solutions was up $0.24 (7.1%) to $3.64 on light volume. Throughout the day, 350 shares of BluePhoenix Solutions exchanged hands as compared to its average daily volume of 4,800 shares. The stock ranged in a price between $3.40-$3.64 after having opened the day at $3.40 as compared to the previous trading day's close of $3.40.

BluePhoenix Solutions Ltd. develops and markets enterprise legacy lifecycle information technology (IT) modernization solutions worldwide. BluePhoenix Solutions has a market cap of $38.4 million and is part of the technology sector. Shares are down 27.4% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate BluePhoenix Solutions a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates BluePhoenix Solutions as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on BPHX go as follows:

  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Software industry and the overall market, BLUEPHOENIX SOLUTIONS 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 -$0.48 million or 127.35% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • BPHX has underperformed the S&P 500 Index, declining 24.52% 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.
  • The revenue fell significantly faster than the industry average of 11.6%. Since the same quarter one year prior, revenues fell by 20.4%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
  • 46.15% is the gross profit margin for BLUEPHOENIX SOLUTIONS LTD which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, BPHX's net profit margin of -39.97% significantly underperformed when compared to the industry average.

You can view the full analysis from the report here: BluePhoenix Solutions 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.

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.

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