3 Stocks Pushing The Diversified Services 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 Diversified Services industry as a whole closed the day up 1.4% versus the S&P 500, which was up 2.0%. Laggards within the Diversified Services industry included General Employment ( JOB), down 3.5%, SmartPros ( SPRO), down 4.5%, PDI ( PDII), down 4.5%, Essex Rental ( ESSX), down 2.9% and Management Network Group ( TMNG), down 2.0%.

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

Management Network Group ( TMNG) is one of the companies that pushed the Diversified Services industry lower today. Management Network Group was down $0.08 (2.0%) to $3.88 on light volume. Throughout the day, 1,499 shares of Management Network Group exchanged hands as compared to its average daily volume of 14,100 shares. The stock ranged in price between $3.88-$3.95 after having opened the day at $3.94 as compared to the previous trading day's close of $3.96.

Management Network Group has a market cap of $37.5 million and is part of the services sector. Shares are up 35.3% year-to-date as of the close of trading on Monday.

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At the close, Essex Rental ( ESSX) was down $0.04 (2.9%) to $1.36 on heavy volume. Throughout the day, 134,790 shares of Essex Rental exchanged hands as compared to its average daily volume of 36,300 shares. The stock ranged in price between $1.31-$1.49 after having opened the day at $1.42 as compared to the previous trading day's close of $1.40.

Essex Rental Corp., through its subsidiaries, rents and distributes lifting equipment to the construction industry in North America. The company operates in three segments: Equipment Rentals, Equipment Distribution, and Parts and Service. Essex Rental has a market cap of $35.0 million and is part of the services sector. Shares are down 56.9% year-to-date as of the close of trading on Monday. Currently there is 1 analyst who rates Essex Rental a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Essex Rental as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on ESSX 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 Trading Companies & Distributors industry. The net income has significantly decreased by 41.9% when compared to the same quarter one year ago, falling from -$1.93 million to -$2.74 million.
  • The debt-to-equity ratio is very high at 3.49 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, ESSX maintains a poor quick ratio of 0.90, which illustrates the inability to avoid short-term cash problems.
  • 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 Trading Companies & Distributors industry and the overall market, ESSEX RENTAL CORP'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 -$2.44 million or 154.42% 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 51.88%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 37.50% 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: Essex Rental 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.

PDI ( PDII) was another company that pushed the Diversified Services industry lower today. PDI was down $0.08 (4.5%) to $1.71 on average volume. Throughout the day, 29,427 shares of PDI exchanged hands as compared to its average daily volume of 23,200 shares. The stock ranged in price between $1.71-$1.79 after having opened the day at $1.76 as compared to the previous trading day's close of $1.79.

PDI, Inc. provides outsourced commercial services to pharmaceutical, biotechnology, and healthcare companies in the United States. PDI has a market cap of $27.5 million and is part of the services sector. Shares are down 62.8% year-to-date as of the close of trading on Monday. Currently there is 1 analyst who rates PDI a buy, no analysts rate it a sell, and 1 rates it a hold.

TheStreet Ratings rates PDI as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, poor profit margins, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

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 PDII 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 Health Care Providers & Services industry. The net income has significantly decreased by 200.7% when compared to the same quarter one year ago, falling from -$0.88 million to -$2.66 million.
  • The gross profit margin for PDI INC is rather low; currently it is at 16.38%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -8.41% is significantly below that of the industry average.
  • Net operating cash flow has declined marginally to -$1.83 million or 1.61% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, PDI INC has marginally lower results.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 63.82%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 183.33% 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.
  • PDI 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. 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, PDI INC continued to lose money by earning -$0.31 versus -$1.75 in the prior year. For the next year, the market is expecting a contraction of 111.3% in earnings (-$0.66 versus -$0.31).

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