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 down 0.4%. Laggards within the Telecommunications industry included Glowpoint ( GLOW), down 5.6%, Internet Gold Golden Lines ( IGLD), down 6.7%, B Communications ( BCOM), down 4.9%, Voltari ( VLTC), down 2.5% and China TechFaith Wireless Comm Tech ( CNTF), down 3.0%.

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 $0.80 (4.9%) to $15.60 on light volume. Throughout the day, 1,008 shares of B Communications exchanged hands as compared to its average daily volume of 2,800 shares. The stock ranged in price between $15.29-$15.60 after having opened the day at $15.29 as compared to the previous trading day's close of $16.40.

B Communications Ltd. provides various communications services in Israel. B Communications has a market cap of $477.5 million and is part of the technology sector. Shares are down 10.0% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates B Communications as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk and disappointing return on equity.

Highlights from TheStreet Ratings analysis on BCOM 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 Diversified Telecommunication Services industry. The net income has significantly decreased by 5940.8% when compared to the same quarter one year ago, falling from $3.98 million to -$232.70 million.
  • The debt-to-equity ratio is very high at 15.80 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.
  • 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 Diversified Telecommunication Services industry and the overall market, B COMMUNICATIONS LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • BCOM, with its decline in revenue, underperformed when compared the industry average of 2.0%. Since the same quarter one year prior, revenues fell by 27.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • B COMMUNICATIONS LTD 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, B COMMUNICATIONS LTD increased its bottom line by earning $1.26 versus $0.41 in the prior year.

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

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At the close, Internet Gold Golden Lines ( IGLD) was down $0.29 (6.7%) to $4.02 on light volume. Throughout the day, 6,163 shares of Internet Gold Golden Lines exchanged hands as compared to its average daily volume of 8,600 shares. The stock ranged in price between $4.00-$4.26 after having opened the day at $4.14 as compared to the previous trading day's close of $4.31.

Internet Gold Golden Lines has a market cap of $85.3 million and is part of the technology sector. Shares are down 36.1% year-to-date as of the close of trading on Friday.

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Glowpoint ( GLOW) was another company that pushed the Telecommunications industry lower today. Glowpoint was down $0.06 (5.6%) to $1.02 on average volume. Throughout the day, 16,100 shares of Glowpoint exchanged hands as compared to its average daily volume of 17,000 shares. The stock ranged in price between $1.01-$1.04 after having opened the day at $1.04 as compared to the previous trading day's close of $1.08.

Glowpoint, Inc. provides video collaboration services and network solutions in the United States. The company offers managed videoconferencing as a cloud-based service with videoconferences hosted in the Glowpoint Cloud and as on-premise solution. Glowpoint has a market cap of $36.9 million and is part of the technology sector. Shares are down 6.4% year-to-date as of the close of trading on Friday.

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

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Highlights from TheStreet Ratings analysis on GLOW go as follows:

  • 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. Compared to other companies in the Internet Software & Services industry and the overall market, GLOWPOINT INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $0.31 million or 31.44% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • GLOW'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 26.25%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. 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 debt-to-equity ratio of 1.17 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, GLOW's quick ratio is somewhat strong at 1.21, demonstrating the ability to handle short-term liquidity needs.
  • GLOW, with its decline in revenue, underperformed when compared the industry average of 9.5%. Since the same quarter one year prior, revenues slightly dropped by 4.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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