3 Stocks Pushing The Services Sector 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 Services sector as a whole closed the day down 0.7% versus the S&P 500, which was up 0.1%. Laggards within the Services sector included Kelly Services ( KELYB), down 4.0%, General Employment ( JOB), down 2.4%, Radio One ( ROIA), down 6.0%, VirtualScopics ( VSCP), down 3.6% and Bioanalytical Systems ( BASI), down 4.1%.

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

Bioanalytical Systems ( BASI) is one of the companies that pushed the Services sector lower today. Bioanalytical Systems was down $0.10 (4.1%) to $2.32 on light volume. Throughout the day, 3,500 shares of Bioanalytical Systems exchanged hands as compared to its average daily volume of 6,100 shares. The stock ranged in price between $2.30-$2.42 after having opened the day at $2.42 as compared to the previous trading day's close of $2.42.

Bioanalytical Systems, Inc. provides drug discovery and development services, and analytical instruments for pharmaceutical, biotechnology, academic, and government organizations in North America, the Pacific Rim, Europe, and internationally. Bioanalytical Systems has a market cap of $19.4 million and is part of the media industry. Shares are down 10.7% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Bioanalytical Systems as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and weak operating cash flow.

Highlights from TheStreet Ratings analysis on BASI go as follows:

  • Compared to its closing price of one year ago, BASI's share price has jumped by 37.71%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • BASI's revenue growth trails the industry average of 25.4%. Since the same quarter one year prior, revenues slightly increased by 7.7%. 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.
  • The debt-to-equity ratio is somewhat low, currently at 0.62, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.47 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • 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 Life Sciences Tools & Services industry. The net income has significantly decreased by 62.7% when compared to the same quarter one year ago, falling from $0.58 million to $0.22 million.
  • Net operating cash flow has significantly decreased to $0.21 million or 75.43% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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

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At the close, VirtualScopics ( VSCP) was down $0.14 (3.6%) to $3.70 on average volume. Throughout the day, 4,310 shares of VirtualScopics exchanged hands as compared to its average daily volume of 3,600 shares. The stock ranged in price between $3.51-$3.85 after having opened the day at $3.80 as compared to the previous trading day's close of $3.84.

VirtualScopics, Inc. provides imaging solutions for the pharmaceutical, biotechnology, and medical device industries. VirtualScopics has a market cap of $11.8 million and is part of the media industry. Shares are up 11.0% year-to-date as of the close of trading on Friday. Currently there is 1 analyst who rates VirtualScopics a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates VirtualScopics as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from TheStreet Ratings analysis on VSCP 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 Life Sciences Tools & Services industry. The net income has significantly decreased by 646.3% when compared to the same quarter one year ago, falling from $0.13 million to -$0.73 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 Life Sciences Tools & Services industry and the overall market, VIRTUALSCOPICS INC'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 -$1.16 million or 716.90% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 35.46% is the gross profit margin for VIRTUALSCOPICS INC which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, VSCP's net profit margin of -27.64% significantly underperformed when compared to the industry average.
  • The revenue fell significantly faster than the industry average of 25.4%. Since the same quarter one year prior, revenues fell by 28.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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

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Radio One ( ROIA) was another company that pushed the Services sector lower today. Radio One was down $0.12 (6.0%) to $1.91 on average volume. Throughout the day, 3,909 shares of Radio One exchanged hands as compared to its average daily volume of 3,300 shares. The stock ranged in price between $1.91-$1.98 after having opened the day at $1.98 as compared to the previous trading day's close of $2.03.

Radio One, Inc., together with its subsidiaries, operates as an urban-oriented multi-media company in the United States. The company operates through four segments: Radio Broadcasting, Reach Media, Internet, and Cable Television. Radio One has a market cap of $4.5 million and is part of the media industry. Shares are down 46.5% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates Radio One as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity and generally disappointing historical performance in the stock itself.

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Highlights from TheStreet Ratings analysis on ROIA go as follows:

  • The debt-to-equity ratio is very high at 25.19 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • 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 Media industry and the overall market, RADIO ONE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • ROIA'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 42.28%, which is also worse than the performance of the S&P 500 Index. 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.
  • The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Media industry average. The net income increased by 0.0% when compared to the same quarter one year prior, going from -$13.22 million to -$13.22 million.
  • ROIA, with its decline in revenue, underperformed when compared the industry average of 8.9%. Since the same quarter one year prior, revenues slightly dropped by 5.3%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.

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

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