3 Stocks Pushing The Technology Sector 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.

The Technology sector as a whole closed the day down 1.1% versus the S&P 500, which was down 1.3%. Laggards within the Technology sector included Cover-All Technologies ( COVR), down 1.8%, LookSmart ( LOOK), down 11.5%, Nortech Systems ( NSYS), down 4.1%, Glowpoint ( GLOW), down 2.1% and Intelligent Systems ( INS), down 3.6%.

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

Glowpoint ( GLOW) is one of the companies that pushed the Technology sector lower today. Glowpoint was down $0.02 (2.1%) to $0.93 on heavy volume. Throughout the day, 31,300 shares of Glowpoint exchanged hands as compared to its average daily volume of 20,100 shares. The stock ranged in price between $0.90-$0.94 after having opened the day at $0.93 as compared to the previous trading day's close of $0.95.

Glowpoint has a market cap of $36.5 million and is part of the telecommunications industry. Shares are down 7.3% year-to-date as of the close of trading on Thursday.

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At the close, LookSmart ( LOOK) was down $0.11 (11.5%) to $0.86 on light volume. Throughout the day, 4,604 shares of LookSmart exchanged hands as compared to its average daily volume of 11,900 shares. The stock ranged in price between $0.76-$0.94 after having opened the day at $0.94 as compared to the previous trading day's close of $0.97.

LookSmart, Ltd. provides search and display advertising network solutions in the United States, Europe, the Middle East, and Africa. LookSmart has a market cap of $4.8 million and is part of the telecommunications industry. Shares are up 35.9% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates LookSmart as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on LOOK 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 36.8% when compared to the same quarter one year ago, falling from -$0.95 million to -$1.30 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, LOOKSMART LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 66.67%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 27.77% compared to the year-earlier 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.
  • LOOKSMART LTD's earnings per share declined by 27.8% in the most recent quarter compared to 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, LOOKSMART LTD continued to lose money by earning -$0.93 versus -$1.92 in the prior year.
  • The revenue fell significantly faster than the industry average of 18.6%. Since the same quarter one year prior, revenues fell by 20.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

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

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Cover-All Technologies ( COVR) was another company that pushed the Technology sector lower today. Cover-All Technologies was down $0.02 (1.8%) to $1.08 on light volume. Throughout the day, 1,001 shares of Cover-All Technologies exchanged hands as compared to its average daily volume of 8,700 shares. The stock ranged in price between $1.08-$1.08 after having opened the day at $1.08 as compared to the previous trading day's close of $1.10.

Cover-All Technologies Inc., through its subsidiary, Cover-All Systems, Inc., licenses and maintains software products for the property/casualty insurance industry in the United States and Puerto Rico. Cover-All Technologies has a market cap of $29.0 million and is part of the telecommunications industry. Shares are down 12.9% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates Cover-All Technologies as a sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and weak operating cash flow.

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Highlights from TheStreet Ratings analysis on COVR go as follows:

  • COVR'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 28.00%, 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. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
  • Net operating cash flow has decreased to $0.47 million or 37.31% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • 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 Software industry and the overall market, COVER-ALL TECHNOLOGIES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • COVR's debt-to-equity ratio is very low at 0.19 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.98 is somewhat weak and could be cause for future problems.
  • 47.74% is the gross profit margin for COVER-ALL TECHNOLOGIES INC which we consider to be strong. 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 -10.65% is in-line with the industry average.

You can view the full analysis from the report here: Cover-All Technologies Ratings Report

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