3 Stocks Advancing The Telecommunications Industry

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.

Two out of the three major indices are trading lower today with the Dow Jones Industrial Average ( ^DJI) trading down 78.22 points (-0.4%) at 17,774 as of Tuesday, Dec. 9, 2014, 3:25 PM ET. The NYSE advances/declines ratio sits at 1,227 issues advancing vs. 1,763 declining with 144 unchanged.

The Telecommunications industry as a whole closed the day up 0.3% versus the S&P 500, which was down 0.2%. Top gainers within the Telecommunications industry included RRSat Global Communications Network ( RRST), up 4.5%, Alteva ( ALTV), up 2.8%, EXFO ( EXFO), up 1.7%, Envivio ( ENVI), up 5.7% and Partner Communications ( PTNR), up 1.6%.

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

EXFO ( EXFO) is one of the companies that pushed the Telecommunications industry higher today. EXFO was up $0.06 (1.7%) to $3.56 on light volume. Throughout the day, 5,646 shares of EXFO exchanged hands as compared to its average daily volume of 29,700 shares. The stock ranged in a price between $3.44-$3.57 after having opened the day at $3.50 as compared to the previous trading day's close of $3.50.

EXFO Inc. designs, manufactures, and markets test, service assurance, and quality of experience solutions for wireline and wireless network operators and equipment manufacturers in the telecommunications industry worldwide. EXFO has a market cap of $101.2 million and is part of the technology sector. Shares are down 25.8% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate EXFO a buy, no analysts rate it a sell, and 3 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 EXFO 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, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from TheStreet Ratings analysis on EXFO go as follows:

  • EXFO 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 2.80, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has significantly increased by 1666.08% to $9.93 million when compared to the same quarter last year. In addition, EXFO INC has also vastly surpassed the industry average cash flow growth rate of -32.17%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.7%. Since the same quarter one year prior, revenues slightly dropped by 1.9%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 33.01%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 66.66% compared to the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, EXFO is still more expensive than most of the other companies in its industry.
  • 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 Communications Equipment industry and the overall market, EXFO INC's return on equity significantly trails that of both the industry average and the S&P 500.

You can view the full analysis from the report here: EXFO 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, Alteva ( ALTV) was up $0.20 (2.8%) to $7.40 on average volume. Throughout the day, 13,055 shares of Alteva exchanged hands as compared to its average daily volume of 14,400 shares. The stock ranged in a price between $7.07-$7.40 after having opened the day at $7.10 as compared to the previous trading day's close of $7.20.

Alteva, Inc., a cloud-based communications company, provides unified communication solutions for organizations. The company operates in two segments, Unified Communications and Telephone. Alteva has a market cap of $42.8 million and is part of the technology sector. Shares are down 12.2% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate Alteva a buy, no analysts rate it a sell, and 1 rates 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 Alteva as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from TheStreet Ratings analysis on ALTV go as follows:

  • ALTV's revenue growth has slightly outpaced the industry average of 0.9%. Since the same quarter one year prior, revenues slightly increased by 0.5%. 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.
  • ALTV's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 2.58, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for ALTEVA is rather high; currently it is at 61.38%. 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 -17.56% is in-line with the industry average.
  • 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 Telecommunication Services industry. The net income has significantly decreased by 487.8% when compared to the same quarter one year ago, falling from $0.34 million to -$1.33 million.
  • Net operating cash flow has significantly decreased to -$10.89 million or 1399.64% 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: Alteva 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.

RRSat Global Communications Network ( RRST) was another company that pushed the Telecommunications industry higher today. RRSat Global Communications Network was up $0.33 (4.5%) to $7.59 on average volume. Throughout the day, 5,337 shares of RRSat Global Communications Network exchanged hands as compared to its average daily volume of 6,000 shares. The stock ranged in a price between $7.36-$7.72 after having opened the day at $7.36 as compared to the previous trading day's close of $7.26.

RRsat Global Communications Network Ltd. provides digital media management and distribution services for broadcasters and content owners in North America, Europe, Asia, Israel, the Middle East, and internationally. RRSat Global Communications Network has a market cap of $135.0 million and is part of the technology sector. Shares are down 13.6% year-to-date as of the close of trading on Monday. Currently there is 1 analyst who rates RRSat Global Communications Network a buy, no analysts rate it a sell, and 1 rates it a hold.

TheStreet Ratings rates RRSat Global Communications Network as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from TheStreet Ratings analysis on RRST go as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.0%. Since the same quarter one year prior, revenues slightly increased by 8.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • RRST 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. To add to this, RRST has a quick ratio of 1.72, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has increased to $3.56 million or 45.34% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 16.29%.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Media industry average, but is greater than that of the S&P 500. The net income increased by 6.1% when compared to the same quarter one year prior, going from $1.10 million to $1.17 million.

You can view the full analysis from the report here: RRSat Global Communications Network 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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