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 down 0.2% versus the S&P 500, which was unchanged. Laggards within the Diversified Services industry included Wilhelmina International ( WHLM), down 4.2%, Ambassadors Group ( EPAX), down 3.2%, ATA ( ATAI), down 2.3%, DLH Holdings ( DLHC), down 2.0% and RLJ Entertainment ( RLJE), down 3.0%.

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

ATA ( ATAI) is one of the companies that pushed the Diversified Services industry lower today. ATA was down $0.09 (2.3%) to $3.87 on average volume. Throughout the day, 12,359 shares of ATA exchanged hands as compared to its average daily volume of 9,800 shares. The stock ranged in price between $3.80-$3.97 after having opened the day at $3.96 as compared to the previous trading day's close of $3.96.

ATA Inc. provides computer-based testing services in the People's Republic of China. ATA has a market cap of $95.2 million and is part of the services sector. Shares are up 3.0% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates ATA as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and relatively poor performance when compared with the S&P 500 during the past year.

Highlights from TheStreet Ratings analysis on ATAI go as follows:

  • ATAI has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.83, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for ATA INC -ADS is rather high; currently it is at 56.34%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 5.45% trails the industry average.
  • 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 Diversified Consumer Services industry and the overall market on the basis of return on equity, ATA INC -ADS has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • 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 Diversified Consumer Services industry. The net income has significantly decreased by 51.6% when compared to the same quarter one year ago, falling from $1.53 million to $0.74 million.

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

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At the close, Ambassadors Group ( EPAX) was down $0.09 (3.2%) to $2.63 on heavy volume. Throughout the day, 56,820 shares of Ambassadors Group exchanged hands as compared to its average daily volume of 13,100 shares. The stock ranged in price between $2.60-$2.83 after having opened the day at $2.72 as compared to the previous trading day's close of $2.72.

Ambassadors Group, Inc., an educational company, organizes and promotes worldwide educational travel programs for students and professional. The company's Ambassador Programs and Other segment offers educational travel services to students and professionals. Ambassadors Group has a market cap of $46.9 million and is part of the services sector. Shares are down 40.8% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Ambassadors Group as a sell. The company's weaknesses can be seen in multiple areas, such as its poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on EPAX go as follows:

  • The gross profit margin for AMBASSADORS GROUP INC is rather low; currently it is at 24.37%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 13.98% trails that of the industry average.
  • Net operating cash flow has declined marginally to -$14.70 million or 3.82% when compared to the same quarter last year. Despite a decrease in cash flow AMBASSADORS GROUP INC is still fairing well by exceeding its industry average cash flow growth rate of -31.97%.
  • EPAX'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 27.66%, 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.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, AMBASSADORS GROUP INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • AMBASSADORS GROUP 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, AMBASSADORS GROUP INC swung to a loss, reporting -$0.45 versus $0.09 in the prior year.

You can view the full analysis from the report here: Ambassadors Group Ratings Report

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Wilhelmina International ( WHLM) was another company that pushed the Diversified Services industry lower today. Wilhelmina International was down $0.25 (4.2%) to $5.72 on average volume. Throughout the day, 2,902 shares of Wilhelmina International exchanged hands as compared to its average daily volume of 2,200 shares. The stock ranged in price between $5.72-$5.96 after having opened the day at $5.96 as compared to the previous trading day's close of $5.97.

Wilhelmina International has a market cap of $35.0 million and is part of the services sector. Shares are down 0.5% year-to-date as of the close of trading on Monday.

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