3 Computer Software & Services Stocks Moving The Industry Upward

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.

All three major indices are trading down today with the Dow Jones Industrial Average ( ^DJI) trading down 95.08 points (-0.5%) at 17,729 as of Monday, Feb. 9, 2015, 4:20 PM ET. The NYSE advances/declines ratio sits at 1,265 issues advancing vs. 1,837 declining with 125 unchanged.

The Computer Software & Services industry as a whole closed the day down 0.4% versus the S&P 500, which was down 0.4%. Top gainers within the Computer Software & Services industry included Formula Systems (1985 ( FORTY), up 1.9%, GlobalSCAPE ( GSB), up 6.3%, GigaMedia ( GIGM), up 6.0%, Edgewater Technology ( EDGW), up 2.8% and China Information Technology ( CNIT), up 2.5%.

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

Edgewater Technology ( EDGW) is one of the companies that pushed the Computer Software & Services industry higher today. Edgewater Technology was up $0.20 (2.8%) to $7.22 on heavy volume. Throughout the day, 34,329 shares of Edgewater Technology exchanged hands as compared to its average daily volume of 15,600 shares. The stock ranged in a price between $7.05-$7.43 after having opened the day at $7.13 as compared to the previous trading day's close of $7.02.

Edgewater Technology, Inc. provides advisory and product-based consulting services in North America. Edgewater Technology has a market cap of $82.7 million and is part of the technology sector. Shares are down 6.4% year-to-date as of the close of trading on Friday. Currently there is 1 analyst who rates Edgewater Technology a buy, no analysts rate it a sell, and none 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 Edgewater Technology 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, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from TheStreet Ratings analysis on EDGW go as follows:

  • The revenue growth greatly exceeded the industry average of 20.8%. Since the same quarter one year prior, revenues rose by 13.1%. 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.
  • EDGW 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 2.60, which clearly demonstrates the ability to cover short-term cash needs.
  • Compared to its closing price of one year ago, EDGW's share price has jumped by 41.99%, exceeding the performance of the broader market during that same time frame. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • 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. In comparison to other companies in the IT Services industry and the overall market on the basis of return on equity, EDGEWATER TECHNOLOGY INC has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.

You can view the full analysis from the report here: Edgewater Technology 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, GigaMedia ( GIGM) was up $0.05 (6.0%) to $0.82 on light volume. Throughout the day, 45,379 shares of GigaMedia exchanged hands as compared to its average daily volume of 117,300 shares. The stock ranged in a price between $0.78-$0.82 after having opened the day at $0.78 as compared to the previous trading day's close of $0.77.

Gigamedia Limited, through its subsidiaries, operates online games for online game players; and cloud computing software and services business in Taiwan and internationally. GigaMedia has a market cap of $41.6 million and is part of the technology sector. Shares are down 17.5% year-to-date as of the close of trading on Friday. Currently there are no analysts who rate GigaMedia a buy, no analysts rate it a sell, and none 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 GigaMedia 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, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on GIGM go as follows:

  • GIGAMEDIA LTD's earnings per share declined by 50.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, GIGAMEDIA LTD reported poor results of -$0.68 versus -$0.26 in the prior year.
  • 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 55.5% when compared to the same quarter one year ago, falling from -$3.11 million to -$4.84 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 Internet Software & Services industry and the overall market, GIGAMEDIA LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for GIGAMEDIA LTD is currently extremely low, coming in at 11.37%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -195.75% is significantly below that of the industry average.
  • The share price of GIGAMEDIA LTD has not done very well: it is down 24.53% 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.

You can view the full analysis from the report here: GigaMedia 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.

GlobalSCAPE ( GSB) was another company that pushed the Computer Software & Services industry higher today. GlobalSCAPE was up $0.19 (6.3%) to $3.20 on heavy volume. Throughout the day, 463,075 shares of GlobalSCAPE exchanged hands as compared to its average daily volume of 25,400 shares. The stock ranged in a price between $3.05-$3.31 after having opened the day at $3.09 as compared to the previous trading day's close of $3.01.

GlobalSCAPE, Inc., together with its subsidiaries, develops and distributes software, delivers managed and hosted solutions, and provides associated services for secure information exchange for enterprises and consumers worldwide. GlobalSCAPE has a market cap of $49.9 million and is part of the technology sector. Shares are up 7.2% year-to-date as of the close of trading on Friday. Currently there are no analysts who rate GlobalSCAPE a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates GlobalSCAPE 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 and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from TheStreet Ratings analysis on GSB go as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.2%. Since the same quarter one year prior, revenues slightly increased by 2.4%. 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.
  • GSB 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 the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.23, which illustrates the ability to avoid short-term cash problems.
  • The gross profit margin for GLOBALSCAPE INC is currently very high, coming in at 95.72%. Regardless of GSB's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GSB's net profit margin of 12.04% is significantly lower than the industry average.
  • GLOBALSCAPE 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. 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, GLOBALSCAPE INC turned its bottom line around by earning $0.20 versus -$0.10 in the prior year.

You can view the full analysis from the report here: GlobalSCAPE 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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