3 Stocks Pushing The Telecommunications 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 Telecommunications industry as a whole closed the day down 0.2% versus the S&P 500, which was unchanged. Laggards within the Telecommunications industry included Internet Initiative Japan ( IIJI), down 1.7%, Glowpoint ( GLOW), down 3.2%, Wireless Telecom Group ( WTT), down 3.4%, B Communications ( BCOM), down 4.5% and eOn Communications ( EONC), down 2.3%.

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

B Communications ( BCOM) is one of the companies that pushed the Telecommunications industry lower today. B Communications was down $0.94 (4.5%) to $20.00 on heavy volume. Throughout the day, 8,189 shares of B Communications exchanged hands as compared to its average daily volume of 4,300 shares. The stock ranged in price between $19.53-$20.86 after having opened the day at $19.94 as compared to the previous trading day's close of $20.94.

B Communications Ltd. provides various communications services in Israel. B Communications has a market cap of $578.7 million and is part of the technology sector. Shares are up 10.6% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates B Communications as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and a generally disappointing performance in the stock itself.

Highlights from TheStreet Ratings analysis on BCOM go as follows:

  • BCOM's revenue growth has slightly outpaced the industry average of 1.0%. Since the same quarter one year prior, revenues slightly increased by 3.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • B COMMUNICATIONS LTD 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. During the past fiscal year, B COMMUNICATIONS LTD increased its bottom line by earning $1.29 versus $0.41 in the prior year.
  • 43.72% is the gross profit margin for B COMMUNICATIONS LTD which we consider to be strong. Regardless of BCOM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BCOM's net profit margin of 39.34% significantly outperformed against the industry.
  • BCOM has underperformed the S&P 500 Index, declining 7.55% 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 debt-to-equity ratio is very high at 14.29 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, BCOM maintains a poor quick ratio of 0.82, which illustrates the inability to avoid short-term cash problems.

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

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At the close, Glowpoint ( GLOW) was down $0.04 (3.2%) to $1.22 on light volume. Throughout the day, 2,968 shares of Glowpoint exchanged hands as compared to its average daily volume of 33,300 shares. The stock ranged in price between $1.22-$1.25 after having opened the day at $1.24 as compared to the previous trading day's close of $1.26.

Glowpoint has a market cap of $44.8 million and is part of the technology sector. Shares are down 9.4% year-to-date as of the close of trading on Monday.

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Internet Initiative Japan ( IIJI) was another company that pushed the Telecommunications industry lower today. Internet Initiative Japan was down $0.16 (1.7%) to $9.44 on heavy volume. Throughout the day, 11,783 shares of Internet Initiative Japan exchanged hands as compared to its average daily volume of 3,700 shares. The stock ranged in price between $9.31-$9.47 after having opened the day at $9.47 as compared to the previous trading day's close of $9.60.

Internet Initiative Japan Inc., together with its subsidiaries, offers Internet connectivity, WAN, outsourcing, and systems integration services primarily in Japan. The company operates in two segments: Network Services and Systems Integration Business, and ATM Operation Business. Internet Initiative Japan has a market cap of $801.9 million and is part of the technology sector. Shares are down 28.2% year-to-date as of the close of trading on Monday. Currently there is 1 analyst who rates Internet Initiative Japan a buy, no analysts rate it a sell, and 1 rates it a hold.

TheStreet Ratings rates Internet Initiative Japan as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

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Highlights from TheStreet Ratings analysis on IIJI go as follows:

  • IIJI's revenue growth trails the industry average of 27.5%. Since the same quarter one year prior, revenues slightly increased by 2.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • 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 1.20 is sturdy.
  • 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. When compared to other companies in the Internet Software & Services industry and the overall market, INTERNET INITIATIVE JAPAN INC's return on equity is below that of both the industry average and the S&P 500.
  • The gross profit margin for INTERNET INITIATIVE JAPAN INC is currently lower than what is desirable, coming in at 26.53%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.78% significantly trails the industry average.

You can view the full analysis from the report here: Internet Initiative Japan 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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