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The Internet industry as a whole closed the day up 1.0% versus the S&P 500, which was down 0.8%. Laggards within the Internet industry included Professional Diversity Network ( IPDN), down 4.2%, LookSmart ( LOOK), down 1.6%,  Sify Technologies ( SIFY), down 2.3% and eLong ( LONG), down 9.2%.

 

TheStreet Ratings Group would like to highlight 2 stocks that pushed the industry lower today:

At the close, LookSmart ( LOOK) was down $0.02 (1.6%) to $1.27 on light volume. Throughout the day, 12,209 shares of LookSmart exchanged hands as compared to its average daily volume of 32,000 shares. The stock ranged in price between $1.27-$1.34 after having opened the day at $1.30 as compared to the previous trading day's close of $1.29.

 

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 $7.0 million and is part of the services sector. Shares are down 37.1% year-to-date as of the close of trading on Tuesday.

 

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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.

 

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 34.41%, 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

 

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Professional Diversity Network ( IPDN) was another company that pushed the Internet industry lower today. Professional Diversity Network was down $0.19 (4.2%) to $4.31 on average volume. Throughout the day, 4,195 shares of Professional Diversity Network exchanged hands as compared to its average daily volume of 3,400 shares. The stock ranged in price between $4.31-$4.56 after having opened the day at $4.40 as compared to the previous trading day's close of $4.50.

 

Professional Diversity Network, Inc. operates online professional networking communities with career resources in the United States. Professional Diversity Network has a market cap of $56.8 million and is part of the services sector. Shares are down 2.4% year-to-date as of the close of trading on Tuesday. Currently there is 1 analyst who rates Professional Diversity Network a buy, no analysts rate it a sell, and none rate it a hold.

 

TheStreet Ratings rates Professional Diversity Network 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.

 

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Highlights from TheStreet Ratings analysis on IPDN 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 266.9% when compared to the same quarter one year ago, falling from -$0.13 million to -$0.49 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Internet Software & Services industry and the overall market, PROFESSIONAL DIVERSITY NETWK'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 -$0.77 million or 2161.76% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The share price of PROFESSIONAL DIVERSITY NETWK has not done very well: it is down 7.71% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • PROFESSIONAL DIVERSITY NETWK 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 year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, PROFESSIONAL DIVERSITY NETWK swung to a loss, reporting -$0.23 versus $0.27 in the prior year. This year, the market expects an improvement in earnings (-$0.19 versus -$0.23).

 

You can view the full analysis from the report here: Professional Diversity Network 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.