3 Stocks Pushing The Diversified Services 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 Diversified Services industry as a whole closed the day up 0.1% versus the S&P 500, which was unchanged. Laggards within the Diversified Services industry included Spar Group ( SGRP), down 2.8%, RLJ Entertainment ( RLJE), down 4.6%, Learning Tree International ( LTRE), down 14.0%, Onvia ( ONVI), down 1.5% and DLH Holdings ( DLHC), down 2.2%.

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

Learning Tree International ( LTRE) is one of the companies that pushed the Diversified Services industry lower today. Learning Tree International was down $0.28 (14.0%) to $1.72 on heavy volume. Throughout the day, 85,322 shares of Learning Tree International exchanged hands as compared to its average daily volume of 10,000 shares. The stock ranged in price between $1.60-$1.83 after having opened the day at $1.83 as compared to the previous trading day's close of $2.00.

Learning Tree International, Inc., together with its subsidiaries, develops, markets, and delivers a library of instructor-led classroom courses for professional development needs of information technology (IT) professionals and managers worldwide. Learning Tree International has a market cap of $26.4 million and is part of the services sector. Shares are up 14.3% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Learning Tree International as a sell. The area that we feel has been the company's primary weakness has been its disappointing return on equity.

Highlights from TheStreet Ratings analysis on LTRE go as follows:

  • 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 Diversified Consumer Services industry and the overall market, LEARNING TREE INTL INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Compared to where it was trading one year ago, LTRE is down 39.38% to its most recent closing price of 1.94. Looking ahead, our view is that this stock still does not have good upside potential and may even suffer further declines.
  • LEARNING TREE INTL INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. During the past fiscal year, LEARNING TREE INTL INC turned its bottom line around by earning $0.00 versus -$0.66 in the prior year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Consumer Services industry. The net income increased by 399.7% when compared to the same quarter one year prior, rising from -$2.21 million to $6.62 million.
  • The gross profit margin for LEARNING TREE INTL INC is rather high; currently it is at 50.64%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 20.39% significantly outperformed against the industry average.

You can view the full analysis from the report here: Learning Tree International Ratings Report

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At the close, RLJ Entertainment ( RLJE) was down $0.09 (4.6%) to $1.86 on average volume. Throughout the day, 11,100 shares of RLJ Entertainment exchanged hands as compared to its average daily volume of 8,400 shares. The stock ranged in price between $1.85-$1.94 after having opened the day at $1.87 as compared to the previous trading day's close of $1.95.

RLJ Entertainment, Inc., an entertainment company, acquires content rights in British episodic mystery and drama, urban programming, and full-length motion pictures. It operates through three segments: Intellectual Property Licensing, Wholesale, and Direct-to-Consumer. RLJ Entertainment has a market cap of $25.1 million and is part of the services sector. Shares are down 2.0% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates RLJ Entertainment 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, poor profit margins, feeble growth in its earnings per share and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on RLJE go as follows:

  • Although RLJE's debt-to-equity ratio of 2.15 is very high, it is currently less than that of the industry average.
  • 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 Media industry and the overall market, RLJ ENTERTAINMENT INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for RLJ ENTERTAINMENT INC is rather low; currently it is at 24.17%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -21.00% is significantly below that of the industry average.
  • RLJ ENTERTAINMENT INC reported flat earnings per share in the most recent quarter. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, RLJ ENTERTAINMENT INC reported poor results of -$2.30 versus -$0.49 in the prior year.
  • RLJE'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 57.70%, 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.

You can view the full analysis from the report here: RLJ Entertainment 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.

Spar Group ( SGRP) was another company that pushed the Diversified Services industry lower today. Spar Group was down $0.04 (2.8%) to $1.40 on light volume. Throughout the day, 2,200 shares of Spar Group exchanged hands as compared to its average daily volume of 6,400 shares. The stock ranged in price between $1.40-$1.42 after having opened the day at $1.42 as compared to the previous trading day's close of $1.44.

SPAR Group Inc., together with its subsidiaries, provides merchandising and other marketing services worldwide. Spar Group has a market cap of $29.8 million and is part of the services sector. Shares are up 2.9% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Spar Group 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 poor profit margins and a generally disappointing performance in the stock itself.

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Highlights from TheStreet Ratings analysis on SGRP go as follows:

  • SGRP's revenue growth has slightly outpaced the industry average of 7.3%. Since the same quarter one year prior, revenues rose by 11.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • SGRP's debt-to-equity ratio is very low at 0.28 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, SGRP has a quick ratio of 2.02, which demonstrates the ability of the company to cover short-term liquidity needs.
  • SPAR GROUP INC reported flat earnings per share in the most recent quarter. 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, SPAR GROUP INC increased its bottom line by earning $0.15 versus $0.13 in the prior year.
  • SGRP'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 26.11%, which is also worse than the performance of the S&P 500 Index. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • The gross profit margin for SPAR GROUP INC is rather low; currently it is at 23.56%. Regardless of SGRP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, SGRP's net profit margin of 1.23% is significantly lower than the industry average.

You can view the full analysis from the report here: Spar Group 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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