3 Stocks Pushing The Internet 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 Internet industry as a whole closed the day up 0.4% versus the S&P 500, which was up 0.3%. Laggards within the Internet industry included Professional Diversity Network ( IPDN), down 2.2%, Selectica ( SLTC), down 2.8%, Innodata ( INOD), down 2.2%, Rediff.com India ( REDF), down 1.9% and CafePress ( PRSS), down 1.8%.

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

Innodata ( INOD) is one of the companies that pushed the Internet industry lower today. Innodata was down $0.06 (2.2%) to $2.72 on light volume. Throughout the day, 9,517 shares of Innodata exchanged hands as compared to its average daily volume of 19,700 shares. The stock ranged in price between $2.71-$2.79 after having opened the day at $2.72 as compared to the previous trading day's close of $2.78.

Innodata Inc. provides business process, information technology, and professional services that are focused on digital enablement. The company operates in two segments, Content Services (CS) and Innodata Advanced Data Solutions (IADS). Innodata has a market cap of $70.2 million and is part of the technology sector. Shares are down 5.1% year-to-date as of the close of trading on Friday. Currently there are no analysts who rate Innodata a buy, no analysts rate it a sell, and 1 rates it a hold.

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TheStreet Ratings rates Innodata as a hold. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

Highlights from TheStreet Ratings analysis on INOD go as follows:

  • Compared to its price level of one year ago, INOD is up 8.62% to its most recent closing price of 2.77. Looking ahead, our view is that this company's fundamentals should not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • Net operating cash flow has significantly increased by 849.46% to $1.41 million when compared to the same quarter last year. In addition, INNODATA INC has also vastly surpassed the industry average cash flow growth rate of -73.31%.
  • INNODATA INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, INNODATA INC swung to a loss, reporting -$0.43 versus $0.29 in the prior year. This year, the market expects an improvement in earnings (-$0.06 versus -$0.43).
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the IT Services industry and the overall market, INNODATA INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for INNODATA INC is currently lower than what is desirable, coming in at 33.03%. Regardless of INOD's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, INOD's net profit margin of -1.47% significantly underperformed when compared to the industry average.

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

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At the close, Selectica ( SLTC) was down $0.14 (2.8%) to $4.86 on heavy volume. Throughout the day, 11,712 shares of Selectica exchanged hands as compared to its average daily volume of 6,100 shares. The stock ranged in price between $4.61-$5.05 after having opened the day at $5.02 as compared to the previous trading day's close of $5.00.

Selectica, Inc. provides cloud-based software solutions for companies in the United States, Canada, India, New Zealand, Switzerland, and the United Kingdom. Selectica has a market cap of $41.2 million and is part of the technology sector. Shares are down 3.5% year-to-date as of the close of trading on Friday. Currently there is 1 analyst who rates Selectica a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Selectica as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from TheStreet Ratings analysis on SLTC 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 Internet Software & Services industry. The net income has significantly decreased by 479.8% when compared to the same quarter one year ago, falling from -$0.47 million to -$2.70 million.
  • Net operating cash flow has significantly decreased to -$4.40 million or 58.19% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The share price of SELECTICA INC has not done very well: it is down 24.07% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.
  • SELECTICA INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, SELECTICA INC reported poor results of -$3.10 versus -$1.67 in the prior year. This year, the market expects an improvement in earnings (-$1.24 versus -$3.10).
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Internet Software & Services industry and the overall market, SELECTICA 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: Selectica 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.

Professional Diversity Network ( IPDN) was another company that pushed the Internet industry lower today. Professional Diversity Network was down $0.10 (2.2%) to $4.12 on heavy volume. Throughout the day, 9,076 shares of Professional Diversity Network exchanged hands as compared to its average daily volume of 4,900 shares. The stock ranged in price between $4.00-$4.25 after having opened the day at $4.25 as compared to the previous trading day's close of $4.22.

Professional Diversity Network, Inc. operates online professional networking communities with career resources in the United States. Professional Diversity Network has a market cap of $53.2 million and is part of the technology sector. Shares are down 13.4% year-to-date as of the close of trading on Friday. Currently there is 1 analyst who rates Professional Diversity Network a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates Professional Diversity Network as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and weak operating cash flow.

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

Highlights from TheStreet Ratings analysis on IPDN go as follows:

  • PROFESSIONAL DIVERSITY NETWK has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, PROFESSIONAL DIVERSITY NETWK swung to a loss, reporting -$0.23 versus $0.27 in the prior year. For the next year, the market is expecting a contraction of 65.2% in earnings (-$0.38 versus -$0.23).
  • 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 Internet Software & Services industry. The net income has significantly decreased by 247.2% when compared to the same quarter one year ago, falling from -$0.27 million to -$0.94 million.
  • 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 Internet Software & Services industry and the overall market, PROFESSIONAL DIVERSITY NETWK'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 -$2.80 million or 679.10% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The gross profit margin for PROFESSIONAL DIVERSITY NETWK is currently very high, coming in at 75.37%. Regardless of IPDN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, IPDN's net profit margin of -59.74% significantly underperformed when compared to the industry average.

You can view the full analysis from the report here: Professional Diversity 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.

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