3 Diversified Services Stocks Nudging The Industry Higher

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.

All three major indices traded up today with the Dow Jones Industrial Average ( ^DJI) trading up 128 points (0.8%) at 16,805 as of Friday, Oct. 24, 2014, 4:20 PM ET. The NYSE advances/declines ratio sits at 1,914 issues advancing vs. 1,162 declining with 133 unchanged.

The Diversified Services industry as a whole closed the day down 0.2% versus the S&P 500, which was up 0.7%. Top gainers within the Diversified Services industry included Essex Rental ( ESSX), up 6.2%, Mastech Holdings ( MHH), up 1.8%, RMG Networks ( RMGN), up 4.5%, Odyssey Marine Exploration ( OMEX), up 10.5% and Luna Innovations ( LUNA), up 1.8%.

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

Odyssey Marine Exploration ( OMEX) is one of the companies that pushed the Diversified Services industry higher today. Odyssey Marine Exploration was up $0.10 (10.5%) to $1.05 on heavy volume. Throughout the day, 1,852,920 shares of Odyssey Marine Exploration exchanged hands as compared to its average daily volume of 420,600 shares. The stock ranged in a price between $1.01-$1.22 after having opened the day at $1.10 as compared to the previous trading day's close of $0.95.

Odyssey Marine Exploration, Inc., together with its subsidiaries, is engaged in the archaeologically sensitive exploration and recovery of deep-ocean shipwrecks worldwide. Odyssey Marine Exploration has a market cap of $83.5 million and is part of the services sector. Shares are down 53.0% year-to-date as of the close of trading on Thursday. Currently there are 2 analysts who rate Odyssey Marine Exploration 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 Odyssey Marine Exploration as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on OMEX go as follows:

  • Currently the debt-to-equity ratio of 1.88 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, OMEX has a quick ratio of 0.58, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • OMEX'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 64.32%, 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.
  • ODYSSEY MARINE EXPLORATION reported significant earnings per share improvement 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, ODYSSEY MARINE EXPLORATION continued to lose money by earning -$0.14 versus -$0.25 in the prior year. For the next year, the market is expecting a contraction of 85.7% in earnings (-$0.26 versus -$0.14).
  • Compared to other companies in the Professional Services industry and the overall market, ODYSSEY MARINE EXPLORATION's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to -$6.27 million or 39.30% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 18.14%.

You can view the full analysis from the report here: Odyssey Marine Exploration 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, RMG Networks ( RMGN) was up $0.06 (4.5%) to $1.39 on average volume. Throughout the day, 78,832 shares of RMG Networks exchanged hands as compared to its average daily volume of 63,400 shares. The stock ranged in a price between $1.25-$1.39 after having opened the day at $1.35 as compared to the previous trading day's close of $1.33.

RMG Networks has a market cap of $17.5 million and is part of the services sector. Shares are down 72.6% year-to-date as of the close of trading on Thursday.

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

Essex Rental ( ESSX) was another company that pushed the Diversified Services industry higher today. Essex Rental was up $0.08 (6.2%) to $1.38 on heavy volume. Throughout the day, 187,585 shares of Essex Rental exchanged hands as compared to its average daily volume of 37,300 shares. The stock ranged in a price between $1.28-$1.38 after having opened the day at $1.30 as compared to the previous trading day's close of $1.30.

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 $34.2 million and is part of the services sector. Shares are down 60.2% year-to-date as of the close of trading on Thursday. Currently there is 1 analyst who rates Essex Rental a buy, no analysts rate it a sell, and none rate it a hold.

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.

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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